1st Edition
Corporate Law and the Theory of the Firm Reconstructing Corporations, Shareholders, Directors, Owners, and Investors
Dozens of judicial opinions have held that shareholders own corporations, that directors are agents of shareholders, and even that directors are trustees of shareholders’ property. Yet, until now, it has never been proven. These doctrines rest on unsubstantiated assumptions.
In this book the author performs a rigorous, systematic analysis of common law, contract law, property law, agency law, partnership law, trust law, and corporate statutory law using judicial rulings that prove shareholders do not own corporations, that there is no separation of ownership and control, directors are not agents of shareholders, and shareholders are not investors in corporations. Furthermore, the author proves the theory of the firm, which is founded on the separation of ownership and control and directors as agents of shareholders, promotes an agenda that wilfully ignores fundamental property law and agency law. However, since shareholders do not own the corporation, and directors are not agents of shareholders, the theory of the firm collapses.
The book corrects decades of confusion and misguided research in corporate law and the economic theory of the firm and will allow readers to understand how property law, agency law, and economics contradict each other when applied to corporate law. It will appeal to researchers and upper-level and graduate students in economics, finance, accounting, law, and sociology, as well as attorneys and accountants.
Acknowledgments
Other Publications by this Author
Prologue
Chapter 0 The Ground Floor: Jurisdiction, Common Law, and Contract Law
Introduction
Jurisdiction
Common Law
Contract Law
Chapter Summary
Bibliography
Endnotes
Part I Foundations: Property Law, Agency Law, Trust Laws, and Partnership Law
Chapter 1 Property and Property Law
Introduction
Types of Private Property
Ways of Owning Private Property
The Law of Private Property
Chapter Summary
Bibliography
Endnotes
Chapter 2 Agency and Agency Law
Introduction
Definition of a Principal-Agent Relationship
Creation, Duration, and Termination of Principal-Agent Relationship
Rights, Duties, and Liabilities of Principals and Agents
Fiduciary Duty
Chapter Summary
Bibliography
Endnotes
Chapter 3 Trusts and Trust Law
Introduction
Trusts and Trust Law
Definition, Creation and Termination of Trusts
Rights, Duties, and Liabilities of Trustors, Trustees, and Beneficiaries
Chapter Summary
Bibliography
Endnotes
Chapter 4 Partnerships and Partnership Law
Introduction
Creation, Duration, and Termination of a Partnership
Partnership Existence, Governance and Operations
Partnerships and Agency Law
Partnership Rights, Duties, and Liabilities
Partners’ Rights, Duties, and Liabilities
Partners and Partnership Property
Partnerships and Partnership Property
Chapter Summary
Bibliography
Endnotes
Part II Corporations, Corporate Law, and the Contradictions of Corporate Law
Chapter 5 Corporations and Corporate Law
Introduction
The State of Corporate Law and Legal Scholarship
Concerning Corporate Ownership, Agency, and Directors’ Duties
Creation and Termination of a Corporation
Corporate Existence, Governance, and Operations
Corporations and Agency and Trust Law
Corporation Rights and Duties
Directors’ Rights and Duties
Corporations and Corporate Property
Shareholders’ Rights and Duties
Corporate Law and Control of Corporations
Chapter Summary
Bibliography
Endnotes
Chapter 6 The Contradictions of Corporate Law
Introduction
The Contradictions of Property Law and Corporate Law
The Contradictions of Agency Law and Corporate Law
The Contradictions of Trust Law and Corporate Law
The Contradictions of Corporate Law
Chapter Summary
Bibliography
Endnotes
Part III Sociology, Culture, and Corporations
Chapter 7 The Social Construction of the Social Reality of Shareholders, Directors, Owners of
shares, and Investors in Shares
Introduction
The Social Construction of Social Reality
The Social Construction of Shareholders, Directors, Owners of Shares,
and Investors in Shares
Chapter Summary
Bibliography
Endnotes
Chapter 8 Power and the Cultural Reproduction of Shareholders, Directors, Owners of Shares,
and Investors in Shares
Introduction
Culture and Power
Cultural Reproduction
Chapter Summary
Bibliography
Endnotes
Chapter 9 Reconstructing Corporations, Shareholders, Directors, Owners of Shares, and
Investors in Shares
Introduction
Reconstructing Corporations
Reconstructing Shareholders
Reconstructing Directors
Reconstructing Owners of Shares
Reconstructing Investors in Shares
Chapter Summary
Bibliography
Endnotes
Part IV Corporatehood, The Corporation as a Legal Person, and The Theory of the Firm
Chapter 10 The Corporation as a Legal Person
Introduction
History and Origin of the Corporation as a Legal Person
Corporatehood and the Corporation as a Legal Person in the United States
Relevance of the Corporation as a Legal Person to the Theory of the Firm
Chapter Summary
Bibliography
Endnotes
Chapter 11 The Theory of the Firm
Introduction 16 italics
The Nature of the Firm
The Theory of the Firm
Chapter Summary
Bibliography
Endnotes
Epilogue
Index
Biography
Wm. Dennis Huber received a DBA in international business, accounting, finance, and economics from the University of Sarasota, Florida; a JD, an MBA in accounting and finance, an MA in Economics, and an MS in public policy from the State University of New York at Buffalo. He also has an LL.M. in homeland and national security lLaw from the Western Michigan University Thomas M. Cooley School of Law. He is a certified public accountant and admitted to the New York Bar. He has taught at universities in the U.S., Canada, Mexico, and the Middle East.
"During the last decades, many areas of the law have been tainted by simplistic economic analyses. Nowhere is this truer than in corporate law, where property rights and agency relationship have been identified when they are absent. Shareholders do not own corporations; they own shares. And Directors and officers are not the shareholders’ agents; they are the agents of the corporation. Dennis Huber has written a serious book evidencing these contradictions and the need to bring back corporate law’s lost logic. It is a must for business lawyers and for economists willing to address the complexity of the legal structure of the firm." — Jean-Philippe Robé, SciencesPo Law School
"Huber's book is one of the most interesting discussions of the relations between law and the economics of the firm to appear in decades. It asserts, in some key respects, the primacy of the law and argues that most of the economics of the firm literature pays too little attention to the law. I don't agree with everything in it, but the book is surely an impressive undertaking that should be of significant inspiration to economists and other social scientists." — Nicolai J. Foss, Copenhagen Business School.
