Carrol Cox wrote:
>Might it not be correct to say that "shareholders" (the 1% or so who
>count) have _always_ determined the policies of the corporations, but
>that during the glory days of the '50s and '60s their errand boys were
>doing such a "good" job that there was no need to waste one's time
>interfering?
-Yeah. They always had the potential power, but it didn't become -actualized until the late 1970s/early 1980s (in the U.S., that is). -Though in the old days, shares were held mainly by individuals; as -institutional investors came to account for a larger portion of -shareownership in the 1960s and 1970s, it became easier for -shareholder to organize and lobby.
I think it was more than just the rise of institutional shareholders, although that played a role. Changes in the law gave minority shareholders greater power to organize takeovers and courts in Delaware and others states, influenced by law and economics, increasingly recognized challenges to manager actions, thereby disciplining them in that way.
And don't forget changes in usury laws and other banking regulations that opened the way for junk bonds. Without the ability to marshall massive debt to leverage takeovers, the large corporations were essentially immune to most hostile takeovers before the 1980s by anyone other than even larger corporations run by those same class of managers. It was debt leverage that allowed the non-managerial class of financiers to newly exercise discipline on the industrial class of managers.
-- Nathan Newman