The Shareholder in France and the United States: A Comparative Analysis of Corporate Legal Priorities

The fundamental question in the law of business organizations – what is the purpose of the corporation? – contains a related question of constituencies and therefore priorities among them – whom does the corporation serve? If, for example, the purpose that justifies the existence of the corporation is the maximization of share price, then it follows that the corporation exists to serve the shareholders that are the beneficiaries of share price increases. The answers to such questions are encoded in the laws governing the decisions of a corporation’s directors and managers and regulating the transactions that allocate the benefits and the burdens of a corporation’s activity. Different societies have reached different conclusions and enshrined different priorities in their respective legal regimes. And while the modern global corporation does business – and may serve stakeholders – far beyond the borders of its jurisdiction of incorporation, these fundamental questions of purpose are generally still determined by the lawmakers in the corporation’s place of incorporation.