Chapter Objectives

Stockholders occupy a position of central importance in the corporation because they are the company's legal owners and they expect high levels of economic performance. But the corporation is not always run solely for their benefit, so they contend with management and the board of directors for control of company policies. Recent changes in corporate governance have strengthened the influence of stockholders and increased the attention given to this stakeholder group by managers and boards of directors.

This chapter focuses on these key questions and objectives:

2 Who controls the corporation, and how has the power of stockholders, relative to that of boards of directors and managers, shifted in recent years?

3 What have social activist investors done to change corporate policies?

4 What are the pros and cons of employee ownership of corporations?

5 Are top corporate executives paid too much?

6 How are stockholders affected by insider trading, and how does the government protect against stock market abuses?