Sunday, June 12, 2011
The Twilight of the Berle and Means Corporation, by Gerald F. Davis, Stephen M. Ross School of Business at the University of Michigan, was recently posted on SSRN. Here is the abstract:
This article describes the major features of the public corporation described by Berle and Means in The Modern Corporation and Private Property and how these have been challenged since the early 1980s. A decade into the twenty-first century, the public corporation may have reached its twilight in the United States. The “shareholder value” movement of the past generation has succeeded in turning managers into faithful servants of share price maximization, even when this comes at the expense of other considerations. But the shareholder value movement also brought with it a series of changes that have undone many core features of the Berle and Means corporation. Corporate ownership is no longer dispersed; the concentration of assets and employment have been in decline for three decades; and today’s largest corporations bear little resemblance to the companies analyzed by Berle and Means. Moreover, there are far fewer of them than there used to be: the United States had half as many publicly traded domestic corporations in 2010 as it did in 1997. In another generation, the Berle and Means corporation may be largely a memory, overtaken by new forms of organization and financing.