Customer Reviews

Bainbridge's Corporations: Law and Economic Analysis (University Textbook Series) (University Casebook Series)

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Students should think twice before investing in this pre-Enron corporate law hornbook. The author, Stephen Bainbridge, does a decent job when he sticks to legal exposition. Unfortunately, for every page of exposition, there is at least one page of special pleading and strained attempts to "retheorize" corporate law. These sections are heavy with jargon from organization theory and behavioral economics; Bainbridge loves terms like "bounded rationality" and "null hypothesis." Even worse, he is incredibly parochial: he tries to map the deep economic foundations of corporate law yet doesn't even consider the experience of countries like Germany or Japan, whose corporate systems are very different from our own. It's a huge gap in a book that pretends to grand theory.

Bainbridge's particular hobby-horse is the notion that corporations are a "nexus of contracts" centered on directors, rather than legal entities owned by shareholders. He presents little or no evidence of judicial (as opposed to academic) support for this approach; in any event, he abandons the theory whenever it leads to results that clash with his general aversion to management accountability, director liability, and judicial review of corporate decisions. His argument that shareholder wealth maximization is consistent with the "nexus of contracts" approach is surely the most tortured section of the book. His statement that shareholders lack political power in the United States may be the silliest sentence ever written by a law professor (which is saying a lot).

The book is cheaper than many hornbooks but students should know what they're getting. Bainbridge worked at the Heritage Foundation and his conservative ideology appears on almost every page. He loves to invoke the authority of economics and cost/benefit analysis to support his conclusions, but, like many law-and-economics disciples, he doesn't actually do any economic or cost/benefit analysis himself, perhaps because he lacks the social science background needed for empirical work. (His undergraduate degree was in chemistry.)

Bottomline: In spite of Bainbridge's occasional flashes of wit (or, rather, sarcasm), I'd recommend his hornbook only for the already-converted. Law students planning to practice (as opposed to teach) corporate law should look elsewhere. There are also a lot of typos and grammatical mistakes.

As someone with no background at all in economics or business pre-law school, this saved me when I took Business Associations. There's always a whiff of political overtones whenever you deal with law and economics (i.e., I had Bainbridge and the section on shareholder voting was called "problems of control" on the syllabus rather than the neutral "shareholder voting" or something hippie-lefty like "making your voice heard"), but it's at the barest non-intrusive minimum here--you almost have to look for it. This is pretty much the perfect, crystal clear, no-nonsense guide to intro corporations law. It's easy to read (at least for a 2 or 3L) and thorough.

I understand corporations because of this book! It really is a great resource. It gives a good overview of corporate law without being too general or too specific. A must!