Customer Reviews

Ownership and Control: Rethinking Corporate Governance for the Twenty-First Century

5 star:		(2)
4 star:		(1)
3 star:		(0)
2 star:		(0)
1 star:		(0)

 

 

Blair reviews how the governance of
public corporations in the U.S. is supposed to work, in theory and by law. She
compares the traditional economic rationale for corporate governance structures,
which stress shareholder and/or management models of control. Then, she posits a
more broadly based stakeholder model, based on a reexamination of the basic wealth
creating purpose of the corporate form. Building on trends which note the declining
cost of capital, relative to total production costs, and the increasing significance
of investments in firm-specific human capital, Blair makes several recommendations
concerning how corporate governance systems might evolve to enhance long-term wealth
creation for all parties. Her critical analysis contains many insights which deserve
wide circulation and debate.

It offers a good introduction to corporate governance. Unfortunately, the book exhibits a clear political bias, making it less objective. I have used it in my course on corporate governance and my students have found this book to be a straightforward and informative read.

Margaret Blair analyzes the two major theoretical approaches to corporate governance and then persuasively refutes the notion, central to both, that maximizing shareholder value is the only legitimate mission of a corporation. The key to her argument, that shareholders are not the only bearers of residual risk, is intuitively obvious in light of the changing nature of work in many sectors of American industry; however, I have never seen the point made with such analytical rigor.