Corporate Short-Termism: A Critical Review of Andrew Johnston's Analysis on the Shrinking Scope of CSR in UK Corporate Law

Rasim Huseynov

Managing Editor of Seamless Trade and International Trade Consultant at Tevolution Ltd

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https://podcasts.com/what-is-corporate-short-termism/episode/corporate-short-termism-and-scope-of-uk-csr

 30 January 2023

Content:

Introduction

Section 1.Impact of New Power Arrangements on Tendency towards Short-Termism

Section 2.The Relationship between Risk and Return and Short-Termism in Decision Making

Section 3. The Complexity of Modern Corporation and Property Rights  

Section 4.The Socio-Economic and Cultural Influences on the Tendency towards Corporate Short-Termism.

Section 5.The Influence of Corporate Law on the Tendency towards Short-Term Decision Making in Corporations.

Conclusion

Introduction

In his article, Andrew Johnston examines the active and systematic promotion of "shareholder primacy" centric approaches in UK corporate law since the late 1940s[i]. Since the beginning of the 20th century, scholars have analysed the potential threats and opportunities posed by the development of the de-personified corporate body, which emerged from the transformation of the traditional enterprise. Berle and Means, for example, astutely observed the changes to the DNA of traditional businesses, and wondered about their implications for society as a whole[ii]. As scholars attempted to predict the outcomes of these changes, such as the rise of plutocracy, socialism, or communism, it became evident that the "corporate system has become a main factor in economic organization through innovative and active employment of property interests.”[iii]

Johnston investigates the sources of short-termism primarily through the lens of corporate law. As strict property doctrines rested on mainstream libertarian principles of individual freedom and free markets, corporate social responsibility was often side-lined. The essay concludes that short-termism is inherent in capitalism as a driving force behind financial markets and cannot be overcome unless fundamental changes are made to the perception of ownership, value, and equity. Orthodox approaches to strict property rights are ideologically motivated, as are socialist approaches to the control of the means of production, but neither has yielded positive outcomes for the majority. Corporate governance and soft law have been mobilised to address the negative effects of the politically biased concept of property embedded within modern corporate bodies. Furthermore, corporate law has fortified the dominance of shareholder privileges through mechanisms such as derivative action, takeover rules, and disclosures, which have served to enrich a privileged class of equity owners at the expense of basic freedoms and rights for those who do not own shares. According to the latest research on hedge funds[iv] and private equity funds[v], the implementation of a doctrine of strict property rights and individual freedom in these industries has resulted in the gross enrichment of a small group at the expense of the majority, contributing to economic inequality and unemployment.

Neither innovation and growth should be monopolised by proponents of individualism and strict property rights, nor should equitable distribution be considered inherent only to socialist systems of ownership of means of production. The key lies in implementing limitations and restrictions on power to prevent increasingly powerful owners from dominating. The essence of the problem is not rooted in the class of the owner, but rather in how owners' rights influence other constituents. In other words, the focus should be on how owners' rights affect the rights of others and how they correlate with the duties and responsibilities of all members involved. Achieving this balance cannot be accomplished solely through corporate governance; it also requires instilling through corporate law a sense of necessity for implementing a new "owners' magna carta" to establish boundaries for increasingly powerful owners, ultimately promoting the common good.

The first paragraph of the essay will analyse the scholarly debate surrounding the modern corporation. The second paragraph will focus on the relationship between risk and return in the context of corporate short-termism. In the third paragraph, the essay will explore various definitions and notions of Corporate Social Responsibility (CSR) and their applications in context of property, followed by an examination of the historical, financial, and cultural factors that have contributed to the prevalence of corporate short-termism. Lastly, the fifth paragraph will be devoted to a brief analysis of shareholders' and stakeholders' rights and liabilities as enshrined in corporate law, and how these influence corporate short-termism.

1.Impact of New Power Arrangements on Tendency towards Short-Termism

Question of re-arrangements of power in modern corporations and responses to it is widely debated. Having its origins from seemingly deeply theoretical discussions, they have proven to have significant effects on society as a whole and on the natural environment.

At one end of the debate, scholars of agency theory were preoccupied with resolving the principal-agent conflict[vi]. Consequently, they saw the role of scholars in building a body of defences for shareholders from the self-centred behaviour of information-powered managers. Doctrines influenced common law and were later enshrined in corporate and soft law to ensure that perpetual prime suspects—company directors—were kept in check. Johnston noted that by trying to resolve the agency-principal problem, corporate law overlooked another problem: corporate short-termism[vii]. While the shareholder primacy doctrine attempted to resolve the problem for shareholders as prime beneficiaries, it failed to accept the interests of other stakeholders as equally legitimate.

On the other end of the debate, an alternative solution with more meaningful consideration of the neglected interests of other constituents within the enterprise and those affected by the enterprise seemed not unreasonable[viii].

Berle acknowledged the importance of redefining property relationships, but the questions he posed seemed too radical to be addressed by his contemporary fellow scholars. However, Berle's views never managed to present alternatives that could curtail corporate managerial power through available mechanisms in order to strike a balance. At the same time, views offered by Dodd did not have a real socio-economic foundation to lean on, and were prone to creating another extreme in the absence of an alternative to shareholder control, according to Berle, which could have made control by managers absolute[ix]. Scholars of managerial control theory, such as Dodd, expressed more confidence in the professional judgment of managers rather than relying on distanced and dispersed owners, a phenomenon also acknowledged by Berle himself.

Berle's intention was not to give free rein to shareholders (nor to managers) but rather to exercise a cautious and evolutionary approach in re-arranging new powers[x]. In other words, shareholders may not be the best and most plausible force to manage newly empowered managers, but they are the best option among existing available forces and are integrated into the existing legal system for managing new ownership arrangements.

Berle noted that new shareholders were not part of the controlling team and its spirit, and since they had a claim on equity-generated revenue and delegated control, they must be released from the protection of their investment by the community[xi]. It is worth noting that Berle's suggestion was only implicit but rightly hinted at the conflict between the financial interest of shareholders and their ability to be independent advocates and trustees of society. However, one must acknowledge that a strict interpretation of property rights was and is a universally acceptable legal concept, and Berle suggested giving speedy application of the known-to-law trustees of shareholders concept and treating new concepts with more caution, allowing them to mature[xii]. He hoped that "rigid enforcement of property rights as a temporary protection against plundering by control would not stand in the way of the modification of these rights in the interests of other groups.[xiii]" Unfortunately, we know that this was not the case, and strictly interpreted property rights never gave way to the interests of society. Hence, we have seen significant levels of social inequality and environmental degradation.

Davies noted that "as companies become larger… and provide risk capital… their appetite to invest and hunger to control businesses to guarantee their returns increases as well.[xiv]" De-personified enterprises on their own create a propensity for a long-term view and are not in conflict with long-term planning. Instead, they create opportunities and resources for long-term corporate and business strategies. Stout noted that the modern enterprise is behind substantial progress for society as a whole, creating perpetual entities with segregated assets, enabling long-term planning beyond short-term horizons[xv]. Separate legal personality allows a degree of psychological distancing of shareholders from the volatility of cash flow. At the same time, it creates a level of stability for the entity to plan long-term with more room to manoeuvre[xvi]. Furthermore, business legal personalities' tax treatments allow managers to disassociate themselves from concerns of individual taxation and enable them to keep personal and corporate matters at a distance. If the corporation is not creating a tendency for short-termism, we need to look at the forces within the corporation and the legal, societal, and economic conditions.

2.The Relationship between Risk and Return and Short-Termism in Decision Making

In pre-industrial societies, the availability of risk capital for growth was constrained by traditional societal and religious views that largely considered lending as a sin of usury[xvii]. Business was typically conducted through an enterprise or partnership model with full liability for the owners. The modern corporation has obscured and dispersed these relationships within complex business systems. However, traditional moral perspectives deserve a more impartial analysis. Although they may appear unreasonable and outdated, the challenges of the modern system often stem from financial complexity, which few people can convincingly explain today. Instead, ideas of radical uncertainty seem to provide a more credible explanation for level of ignorance  investors facing in anticipation  what the future may bring[xviii]. This recently acknowledged fatality of uncertainty further adds pressure on investors providing risk capital.

In the early days, when conventions were just being established, proponents of efficient markets and a laissez-faire approach justified shareholder primacy as the only correct choice, with investors providing risk capital and being natural claimants of residual value[xix]. This also enabled the sharing of risk, creating additional value from the scale of risk-taking itself. These ideas fit into agency theories that sought to address power imbalances. Davies highlights the distinction between two types of shares: preferential shares, which provide guaranteed income without voting control, and equity shares, backed by voting rights, as a justifiable trade-off that balances claims to either guaranteed  income or influence[xx].

It was not unreasonable to assume that relinquishing investor control would not encourage investors to confidently lend their money. Limited liability, rights to both revenue and income (returns in the form of dividends and share value appreciation), and a system of remedies for shareholder rights were expected to instil investor confidence. However, apparent control or its weaker relative for decisions involving risk capital changes hands so often that it may become diluted among the various constituents of a diverse investment chain[xxi]. As Berle observed, the creation of the stock market transformed stockholders from allocators of risk capital to allocators of passive property, raising questions about who is in control and who benefits from the limited liability shield[xxii]. In his 1965 article, Berle concluded that the stockholder's position is protected by an elaborate legal system, which he believes is justified by the American ideal of individualism and the importance of distributed wealth[xxiii].

Berle's claims and justifications are deeply ideological, reflecting the complex nature of human-made socio-economic systems in a world of competing rivals. The modern limited liability corporation has undoubtedly provided an abundance of risk capital, enabling increased growth and scale. However, this has also given rise to three anticipated and unanticipated threats. The first threat concerns the social well-being of individuals, employees, buyers, and suppliers of companies. The second threat relates to social cohesion and the integrity of society and the state as a whole, resulting from corporate failures. The first threat has global dimensions, as the influence of multinational corporations transcends national borders. The third threat pertains to the natural environment shared by all living organisms, disregarding state borders or other human-made constructs. The responsibility and unique role of investors in addressing this existential environmental challenge are emphasised through the concept of "financed emissions," which is part of the current voluntary reporting for financial corporations[xxiv]. There is a need for new approaches to limited liability that enable society's constituents to identify ones who is liable and measure returns. The legal principle of neighbourly injury should be applied consistently to newly emerged tradable equity ownership and must not be left vulnerable to unchecked abuse.  Finally, shareholders are not the only ones who provide risk capital, and they primarily contribute monetary risk capital. Employees, who are typically paid a month in arrears, need to commit to long-term employment, curtailing their personal freedoms. Shareholder-funded businesses often rely on government subsidies, tax breaks, and funding credits for exports or guarantee waivers for imports. Nature's natural services, considered as shared intergenerational capital, are also utilised, particularly when they have been historically underrepresented. Suppliers must plan their production and are often expected to offer credit terms. Buyers depend on a reliable supply chain and share risks with suppliers in case of disruptions. The regulation of these risks has been largely left to normative or voluntary corporate governance, which has been subject to extensive abuse.

3. The Complexity of Modern Corporation and Property Rights  

To better understand the sources of shareholder primacy-induced short-termism and its negative social outcomes, we should attempt to dissect the segments and interrelationships created by artificial constructs, while also personifying the real objects that have been neglected by these constructs. This approach will help us examine the problem from two independent angles. Such real objects have been drawn into exploitation but have not been considered real or have been treated as insignificant parts of the equation. The relationships with these tangible entities, including communities, employees, creditors, and most importantly, the natural environment, have been predominantly left outside of scope of company law.

The natural environment provides readily available natural capital and assets, which has led to the distorted exploitation of these resources for the benefit of a small minority at the expense of the majority[xxv]. Mark Carney, former governor of the Bank of England, pointed to the existence of the "tragedy of the horizon," a residual effect of corporate short-termism characterized by a narrow view of investment and return[xxvi]. This existential threat to humanity is significantly attributed to man-made global warming, driven by economic growth fuelled by consumer demand and enabled primarily through modern, limited liability companies. However, earlier research primarily focused on the social consequences of shareholder primacy and the "market myopia of its advocates.[xxvii]"

Following the same logic and considering the shareholder-owner as the controlling force controlling ultimate corporate decisions preventing abuse of managerial powers, it is essential to understand the main motivations and aims behind investments. Careful analysis of shareholder behaviour should be conducted, regardless of whether the stockholder is an individual or an institution. Simultaneously, to untangle motivations, relationships, and outcomes, we must recognize that the corporation is an artificial, man-made construct that does not exist in the world of real objects. Foster suggested that while we apply corporate social responsibility to the enterprise as an artificial construct, it is essential to acknowledge that achieving socially desirable outcomes is a complex process that involves various influences from tangible individuals[xxviii]. Therefore, to address corporate short-termism, we must analyse the forces behind corporations and identify the reasons and effects generated by these individuals.

From the perspective of a layperson, who could also be considered an investor in shares, ownership rights are often seen in terms of the benefits derived from real or intangible objects. On the other hand, the law views these rights from two perspectives: natural property rights and, more importantly, the relationships that arise from the ownership of these objects. This dual approach has shaped the interpretation of ownership and its associated rights to reflect the historical evolution of property rights. “The word “property”…with both lawyers and laymen has no definite and stable connotation. Sometimes it is employed to indicate the physical object to which various legal rights , privileges, etc., relate; then again – with far greater discrimination and accuracy- the word is used to denote the legal interest (or aggregate of legal relations) appertaining to such physical object.”[xxix] 

Consequently, the law's interpretation of property rights can sometimes lead to errors of transposition, often reflecting the interests of those in power[xxx]. This bias may manifest in the form of treating privileges as rights without providing remedies to enforce rights explicitly enshrined in law. Consequently, this not only hinders the achievement of desired outcomes but also creates a false perception that the problem is being addressed when, in reality, it may be deteriorating.

Using the example of corporation and company law, there are duties that directors must fulfil[xxxi], with shareholders having remedies if these duties are not met[xxxii]. Shareholders can remove directors or initiate ordinary or special resolutions to assert their will[xxxiii], and they also have the option to exit. Additionally, the bargaining power of managers is diminished by preventing them from taking defensive actions during takeovers[xxxiv]. Takeover Code given statutory recognition under Companies Act.[xxxv] In effect, if corporate law has changed the fundamental nature of property, then the UK Takeover Code has genetically modified its instinct for self-preservation. Drawing a metaphorical comparison, corporate behaviour might resemble that of myotonic goats, falling into paralysis at the very moment they need to fight or flee[xxxvi]. All of these factors create significant imbalances for other constituents of the corporation and stakeholders.

While company law allows directors to consider the interests of the community[xxxvii], they lack remedial protection, meaning that their ability to do so cannot be treated as a right but only as a privilege, following Hohfeld's logic. While the law has attempted to manage relationships among parties on a large scale and reduce agency and transaction costs, it has overlooked the real effects created by established relationships, thereby exposing the weaknesses in stakeholder defences within the traditional shareholder primacy model. Defences created through corporate governance have simply not been strong or efficient enough to mitigate the imbalances resulting from legal arrangements.

Singer suggests treating the law of property not merely as the law of things but as the law of democracy, which is one of the aims that the law strives to achieve[xxxviii].

4. The Socio-Economic and Cultural Influences on the Tendency towards Corporate Short-Termism.

"When a man buys an investment or capital asset, he purchases the right to a series of prospective returns, which he expects to obtain from selling its outputs after deducting the running expenses of obtaining that output, during the life of the asset."[xxxix]

Interest rates and value for money become concerns for each investor. A rational investor will not invest in assets providing lower returns unless there is less risk, and vice versa. However, the historical review of investor and market rationality has not withstood scrutiny[xl].

Fisher described human impatience to enjoy as a main attribute of human nature, and stated that "all rates of impatience resolve themselves in preference for early income over late income... with exceptions of love for posterity being the most powerful cause to accept reduced income."[xli] Fisher meant love for posterity in the sense of direct descendants, rather than for society as a whole. Consequently, this exception was not expected to translate into cultivating long-termism at the corporate level.

Maslow's theory of human motivation left more room for long-term drives in acquisition behaviour. Maslow identified basic motivations for psychological and safety needs, and emphasized the importance of belonging, love, esteem needs, and self-actualization once basic necessities were fulfilled[xlii]. There is a strong and influential movement among investors for community centred shareholder activism, which may tempt one to explain the motivations of activist shareholders as going far beyond just making commercial profit. This topic deserves careful research so that certain conclusions can be drawn.

The aspects of human character, such as greed and the desire to win, serve as primary motivators deeply ingrained in human psychology. These traits have been actively exploited by proponents of shareholder primacy. According to Thorstein Veblen  the pursuit of comfort and security from need drives accumulation in modern industrial  societies[xliii]. In global competition of individualism and communitarianism the former was dominating doctrine particularly after collapse of socialist block.  Furthermore,  the growth of emerging economies and poverty reduction in developing nations suggest that the global desire for collective wealth accumulation is unlikely to diminish in the near future.

Keynes contrasts past manager-led businesses with modern investor-led corporations, noting that earlier enterprises relied on optimistic and creative individuals pursuing businesses as a way of life, without precise profit calculations. This also may suggest that motivating drivers were not only profit but activity and integrity of dedicated tradesman. However, the results of such investments were uncertain and often disappointing. The separation of ownership and control in modern corporations allows for investment flexibility but introduces instability due to the market's need to value these investments for exit and exchange purposes[xliv].

John Maynard Keynes uses the metaphor of a "Beauty Parade," where market participants, in order to win, must anticipate the perceived judgments of other members rather than rely on their own objective and rational estimates[xlv]. This market participant behaviour can serve as fertile soil for corporate short-termism. Perceived value becomes more important than actual long-term value, as the market's perceived valuation of a business and its management may threaten its very existence.

Considering all of the above, we can conclude that the combination of speculative and profit-seeking investors, coupled with a volatile and deceptively valued market, does not create a conducive environment for long-term approaches.

5. The Influence of Corporate Law on the Tendency towards Short-Term Decision Making in Corporations.

Short-termism refers to the prioritization of short-term financial gains over long-term growth and sustainability[xlvi]. The rise of shareholder primacy, coupled with factors such as increased global competition for capital resources, the role of the City of London in shaping the UK's economic strategy, the equating of greed with responsible citizenship, and financial deregulation[xlvii], has contributed to the prevalence of short-termism in UK public corporations

Corporate law has become increasingly focused on reducing operational costs and agency costs, consequently curtailing the bargaining power of key constituents in the business process. This ideology gained traction during the 1980s and shielded shareholders from the scrutiny of courts concerning the rights of non-shareholders through the introduction of The Takeover Panel. The Companies Act 2006 further cemented this process by subordinating all constituents and the company itself to the interests of shareholders. In effect, the law not only limited shareholders' financial liability but also shielded them from direct scrutiny by courts and stakeholders.

Additionally, legislation inspired by academic and business management scholars promoting shareholder primacy theories encouraged the alignment of managers' earnings with shareholders' interests. Consequently, management teams began prioritising stock price appreciation and dividends over long-term growth and sustainability, following the incentives established for maximising shareholder profits.

In summary, the evolution of corporate law and governance in the UK since 1948 has played a crucial role in fostering short-termism. The prioritisation of shareholder value, the influence of various external factors, and the alignment of managers' incentives with shareholders' interests have collectively driven corporations to prioritise short-term financial gains over long-term growth and sustainability. This shift has had significant implications for the relationships between corporations, their stakeholders, and society at large.

The legal and regulatory frameworks have primarily focused on directors' fiduciary duties to shareholders, with less emphasis on the interests of other stakeholders. Section 172 of the Companies Act 2006 does impose a duty on directors to act in good faith to promote the success of the company for the benefit of its members (shareholders) as a whole [xlviii]. However, shareholders play a crucial role in driving demand and shaping the concept of company success through their legally enshrined rights to take legal action. Directors have duties to both the company and its shareholders, while shareholders possess the rights to appoint and remove directors through ordinary resolutions.[xlix]

Shareholders have the right to approve the directors' remuneration policy in a binding vote, usually held every three years in a general meeting[l]. They also have remedy to take derivative action by approval of court against directors[li]. Furthermore, the takeover code, which is based on the non-frustration rule, is designed to ensure that the offeree company's board does not take defensive actions that could obstruct a takeover bid.[lii] Johnston observed that in this case, the consideration of employees' interests remains largely unprotected. [liii] If directors choose to act in the interest of employees, who often become victims after a takeover, they are unable to intervene effectively. We can conclude that the organisational climate can be heavily influenced and skewed towards shareholders' interests.

The emergence of short-termism has had negative implications for employees, as well. As corporations focus on maximizing shareholder value, they often exercise cost-cutting measures such as layoffs, wage suppression, and reduced investment in employee development[liv].  The Companies Act does not contain any provisions regarding employee rights or employee participation in boards of directors, and earlier plans to implement changes in the law have not materialised[lv]. The sentence in Section 172 of the Companies Act, which mentions taking employees' interests into consideration, does not provide any specific remedies. Employees do not have the rights to enforce any breaches, nor are they granted the rights to pursue derivative actions. As a result, the primary force behind value creation is not factored into the equation, and neither employees nor other essential participants in the process are considered to have rights resembling those of members.

Short-termism has also impacted the relationships between corporations and their suppliers. Cost-cutting measures and the constant pursuit of efficiency have led corporations to adopt strategies such as just-in-time inventory management, squeezing supplier margins, and delaying payments[lvi].  Case law mandates that directors take into consideration the interests of suppliers during financial difficulties, shifting their focus from shareholders' interests to those of creditors. [lvii] Large corporations often abuse their bargaining power by using extended credit terms as a source of working capital.  This, in turn, creates another risk group comprising suppliers and employees; the latter, on average, provide a one-month credit to companies before receiving payment. Credit terms of 120 days are not unheard of, and they are still being violated by large corporations. This situation has prompted government intervention; however, there are no legal provisions within company law to protect suppliers' interests until a company faces financial difficulty. Often, when signs of insolvency emerge, a change in directors' attitudes comes too late, rendering their actions insufficient to address the issue.

Customers are also impacted by corporate short-termism. Corporations tend to offer better prices for larger clients, leaving smaller and more vulnerable customers to bear higher costs. Short-term strategies often overlook these equitable concerns. While vulnerable customers are forced to use pre-payment meters, the chief executives of these companies may enjoy significant pay raises, further exacerbating the disparity.[lviii]

6. Conclusion

The creation of the modern limited liability corporate body has generated significant wealth and fostered unprecedented accelerated growth. The modern corporation has spurred innovation, created jobs, and alleviated absolute poverty to a large extent, while reducing relative poverty. It has also supported the existence of pluralist democratic societies, helping them withstand totalitarian regimes that oppress freedom of speech and violate human rights. However, the modern corporation has also contributed to life-threatening climate change, has not resulted in geographically balanced economic growth, facilitated the creation of uncontrolled kleptocracies, and has led to significant wealth inequality. Each of these negative outcomes has the potential to eradicate the wealth created by the corporate body in an instant. Furthermore, corporate short-termism and the excessive pursuit of profit for quick market approval, coupled with transaction-driven management focused on growth through acquisitions rather than natural organic development and long-term investment, have had far-reaching consequences for stakeholders affected by corporate activities.

Corporate law, on the other hand, focuses on reducing agency costs, transaction costs, and minimizing conflicts within corporations. It has sometimes allowed the rise of power among owners at the expense of other stakeholders. As both corporations and individuals become increasingly powerful, there has been insufficient scrutiny of the negative consequences of ownership. This lack of oversight is often obscured by the belief in self-correcting markets, individual freedoms, and a strict interpretation of property rights.

To address these issues, it is necessary to de-ideologize property rights and focus on their outcomes. By analysing the full life cycle of property and striving for equitable results for both owners and the community, the legal system can effectively employ its available tools. A deeper understanding of ownership implications, rather than glorifying established dogma, serves as a solid starting point for fostering long-term collaboration among all business stakeholders.

This article is based on an essay originally written for the postgraduate law program at University of Kent. Special thanks to Dr Iain Frame, whose lectures and feedback were invaluable during the development of the original work.

For practical insights and applications in international trade, please visit our professional blog at https://www.tevolution.international/blogs

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References

[i] Andrew Johnston, 'The Shrinking Scope of CSR in UK Corporate Law' (2017) 74(1) Washington and Lee Law Review 1001

[ii] Adolf Berle and Gardiner Means, The Modern Corporation and Private Property (Bluebook, 1933) 8

[iii] ibid, 2

[iv] Jan Fichtner and Eelke M. Heemskerk, 'The New Permanent Universal Owners: Index Funds, Patient Capital, and the Distinction between Feeble and Forceful Stewardship' (2020) 49 Economy and Society 493, 503

[v] Eileen Appelbaum and Rosemary Batt, 'A Primer on Private Equity' (2012) 55 Challenge M.E.Sharpe inc 5, 17

[vi] Frank Eastbrook and Daniel Fischel, ‘The Economic Structure of Corporate Law’ (HUP 1991) 1-22

[vii] Johnston, (n 1) 1005

[viii] Margaret Blair, ’Ownership and Control: ‘Rethinking Corporate Governance for The Twenty-First Century’ in Thomas Clarke (ed), ‘Theories of Corporate Governance’ (Routledge 2004) 174; Margaret Blair and Lynn Stout, ‘Specific Investment Explaining Anomalies in Corporate Law’ [2006] The Journal of Corporation Law, 719; Lynn Stout, ‘Bad and Not so Bad Argument for Shareholder Primacy’ [2002] Southern California Law Review, 1189; Merrick Dodd, ‘For Whom Are Corporate Managers ae Trustees’ (1932) 45 Harvard Law Review, 1163

[ix] Adolf Berle, ‘For Whom Corporate Managers are Trustees’ (1932) 45 Harvard Law Review 1365,  page 1367

[x] ibid 1372

[xi] Berle, (n 2) 355

[xii] Berle, (n 9) 1367

[xiii] Berle, (n 2) 356

[xiv] Paul Davies, ‘Introduction to Company Law’ (OUP, 2020) 20-25

[xv] Lynn Stout, ‘The Corporation As a Time Machine: Intergenerational Equity, Intergenerational Efficiency and Corporate Form’ (2015) 38, Seattle University Law Review, 685, 695

[xvi] Davies, (n 14) 24

[xvii] Paddy Ireland, ‘Company Law and Myth of Shareholder Ownership’ (1999) 62 MLR 32, 34-38

[xviii] John Kay and Mervin King, Radical Uncertainty (The Bridge Street Press 2020) 38

[xix] Eugene Fama and Michael Jensen, 'Separation of Ownership and Control' in Thomas Clarke (ed), ‘Theories of Corporate Governance’ (Routledge 2004) 64, 75

[xx] Davies, (n14) 14

[xxi] Diane -Laure Arjalies and others, ‘Chains of Finance’ (OUP, 2017) 5

[xxii] Adolf Berle,  'The Impact of the Corporation on Classical Economic Theory' in Thomas Clarke (ed), ‘Theories of Corporate Governance’ (Routledge 2004) 45, 51

[xxiii] ibid 52

[xxiv] Paul Verney, ‘Carney: Grasp of financed emissions soon will be “table stakes” for FIs’ (Responsible Investor, 10 October 2022) < https://www.responsible-investor.com/carney-grasp-of-financed-emissions-will-soon-be-table-stakes-for-fis/#:~:text=Carney%20co%2Dfounded%20GFANZ%20in,was%20%E2%80%9Cobviously%20table%20stakes%E2%80%9D.  > Accessed 15 March 2023

[xxv] World Inequality Lab, Climate Inequality Report 2023: ‘Fair Taxes for a Sustainable Future of Global South’ (Lucas Chancel, Philipp Bothe and Tancrede Voituriez eds, 2023) 85

[xxvi] Mark Carney, 'Breaking the Tragedy of the Horizon – Climate Change and Financial Stability' (Speech delivered at Lloyds of London, 29 September 2015)

[xxvii] Blair, (n 5) 174-188

[xxviii] Nicholas Foster, 'The theoretical background: the nature of the actors in corporate social responsibility' in Stephen Tully (ed), ‘Research Handbook on Corporate Legal Responsibility’ (Edward Elgar 2005) 3, 5

[xxix] Wesley Hohfeld, ‘Fundamental Legal Conceptions’ (1913-1914) Yale Law Journal 16, 21

[xxx] Pierre Schlag, ‘How To Do Things With Hohfeld’ (2015) 1 & 2 Law and Contemporary Problems, 185, 195

[xxxi] Companies Act, ss 171-177

[xxxii] ibid ss 260-262

[xxxiii] ibid ss 282-283

[xxxiv] The City Code on Takeovers and Mergers (the "Takeover Code"), General Principle 6; Rule 21

[xxxv] CA, (n 31) ss 942-945

[xxxvi] Helen Pilcher, ‘Life is Changing’ (Bloomsbury Sigma, 2021) 60

[xxxvii] CA, (n 31) s 172

[xxxviii] Joseph Singer, ‘Property as the Law of Democracy’(2014) 63 Duke Law Journal1287, 1335

[xxxix]John Maynard Keynes, ‘The General Theory of Employment, Interest and Money’ (Woodworth Editions, 1987) 117

[xl] Paul Collier and John Kay, ‘Greed is Dead Politics After Individualism’ (Penguin Books, 2021) 27

[xli] Irving Fisher, ‘The Impatience Theory of Interest; a Study of the Causes Determining the Rate of Interest’(Scientia 1911) 11-(388)-14-(391)

[xlii] Abraham Maslow, ‘A theory of Human Motivation’  (Wilder Publications, 2018) 33

[xliii] Thorstein Veblen, ‘The Theory of the Leisure Class’(Dover Thrift Editions, 1994) 21

[xliv] Keynes, (n 38) 129

[xlv] ibid 130

[xlvi] CFA Institute, ‘Short-Termism’ <  https://www.cfainstitute.org/en/advocacy/issues/short-termism#sort=%40pubbrowsedate%20descending.> Accessed 9 April

[xlvii] Amy Edwards, ‘Are We Rich Yet? The Rise of Mass Investment Culture in Contemporary Britain’(University of California Press, 2022) 244

[xlviii] CA, (n 31) s 172

[xlix] ibid s 159, s 168

[l] ibid s 215

[li] ibid ss 260-269

[lii] TC, (n 34) Rule 21.1

[liii] Johnston, (n 1) 1027

[liv] House of Commons Business, Innovation and Skills Committee, 'Mergers, acquisitions and takeovers: the takeover of Cadbury by Kraft', HC 234, Session 2009-10

[lv] Johnston (n 1) 1023

[lvi] House of Commons Business, Energy and Industrial Strategy and Work and Pensions Committees, 'Carillion', HC 769, Session 2017-19, 24-26

[lvii] West Mercia Safetywear Ltd v Dodd [1988] BCLC 250

[lviii] Akila Quinio, ‘Centrica chief received fivefold pay rise despite prepayment meter controversy’ Financial Times    (London, 22 March 2023)