(By Paul Davies) 

I The Emergence of Shareholder Value

In 1956 C A R Crosland published a book entitled The Future of Socialism. Crosland had been an academic economist at Oxford, was at the time of writing Labour MP for Grimsby and was to be briefly a minister in the 1964 Labour government before an untimely death. He was the leading theorists on the reformist wing of the Labour Party. Besides setting out a positive agenda for the Party, the book was concerned to divert the Party away from some of its then current policy proposals. These proposals included ideas for further nationalisation of industry and, less radically, proposals to place government or worker directors on the boards of large companies. Although Crosland conceded that ‘In principle I can see little to be said for the present law’, which vested control rights in shareholders, neverthel sse equally little valuable social change was to be expected from a reform of company law: ‘It is easy to become bemused with constitution-making and legal formulae’. This was because the ‘functionless’ shareholders were incapable of exercising the control rights which the law vested in them, as a result of the separation of management and ownership, and in any event did not desire to do so. In consequence ‘the psychology and motivation of the top management class itself’ had fundamentally changed as a result of its new-found independence from the firm’s shareholders. In this brave new managerialist world ‘a change in the law, logical though it might be, would make no difference to the underlying reality. Despite the existing law, the shareholders have little power, and the government and the unions have much’. By contrast, the Hampel Committee on Corporate Governance, when it turned in 1998 to consider ‘the aims of those who direct and control companies’, was clear that: ‘The single overriding objective shared by all listed companies, whatever their size or type of business, is the preservation and the greatest practical enhancement over time of their shareholders’ investment.’ The pursuit of this objective might require the company to develop rela tionships with a number of non-shareholder groups but in doing so they must have regard to the overriding objective just identified.

Of course, it might be that these two very different views of managerial objectives and behaviour reflected different political standpoints, and rather than any actual changes in the factors constraining and directing the decisions of the centralized management of large companies over the period between the 1950s and the end of the last century. However, this seems unlikely. Crosland, for example, quoted in his support the 1950s champions of shareholder value. He could do this because they shared his analysis of then prevailing situation, though of course they differed from him radically on the issue whether this situation was to be welcomed. Equally, a notable contemporary critic of the status quo can share with Hampel the view that shareholder interests dominate management decision-making, whilst rejecting that Committee’s assessment of the utility of such a situation. This paper will therefore take as its, admittedly not fully proved, starting point the proposition that, over the last half century or so, the interests of shareholders have become central to the decision-making of centralised management in a way they were no t at the beginning of the period. By contrast the interests of other stakeholders, or even the freedom of management to conduct the business in its own interest, have declined in potency. The issue which the paper seeks to address is the nature of the legal changes which have contributed to this highly significant development. 

II Company Law: Constant Content and Changing Contex

 (A) The Stability of Company Law In seeking to address the question posed at the end of the previous paragraph, one comes up against an immediate paradox.

One might imagine that an increase in the power of shareholders as against management would be reflected in changes in company law, since one of the central tasks of company law is to regulate the principal-agent relationship between shareholders and the centralised management of large companies.

Yet, the recrudescence of shareholder influence appears to have occurred against the backdrop of a remarkable stability over the post-war period in the relevant company law provisions. That period may be about to end with the recent publication of two important reports from the Law Commissions (on shareholder remedies and directors’ duties) and with the very recent proposals of the Company Law Review, established by the Department of Trade and Industry. Nevertheless, during the period with which we are concerned company law remained largely unchanged in the relevant respects. In fact, the one significant change to the law, which will be discussed further below, appeared to go in the opposite direction from the promotion of shareholder value. What are the aspects of company law most relevant to the promotion of shareholder value on the part of centralised management? These may be seen as being, on the one hand, the standards governing the exercise of discretion by centralised management – mainly the law on directors’ duties. In particular, how far do these standards constrain management to place the shareholders’ interests first? On the other hand, the rules relating to the appointment and removal of the members of the board of directors are crucial. In whose hands to these powers lie? The former is still governed, substantially, by the common law, though with some statutory accretions, whilst the latter has always been regulated principally through the Companies Acts and the articles of association of particular companies. The common law moves forward only if litigation drives it, and yet litigation over the common law of directors’ duties in the UK (in contrast to the USA) has always been infrequent. English law has traditionally constrained very tightly the locus standi of individual or even minority groups of shareholders to bring derivative actions; and this has had a consequential impact upon the development of the substantive law. Indeed, it can be maintained that the last fundamental review by theHouse of Lords of the law relating to directors’ duties occurred as long ago as 1942.

 As for the appointment and removal of board members, the centrepiece of the law relating in this area, the right of an ordinary majority of the shareholders to remove a director at any time, was added to the statute book in 1947. Thus, throughout the ‘Crosland -Hampel’ period, the shareholders’ legal powers to remove the board remained a constant. However, it may be entirely wrong to suppose that the rise of shareholder value required any change to substantive company law. Crosland did not deny that the company law of his period vested control rights in the shareholders; his argument was that in practice shareholders were unable to enforce the rights that company law conferred upon them because of the dispersion of shareholdings. If this argument is correct, then a change in the factual ability of shareholders to enforce their rights might explain the rise of shareholder value to its present position of prominence. The rest of this section will explore this hypothesis, which embodies two sub-propositions. The first is that the (unchanging) company law does embody a theory of shareholder control (Section II(B)); the second that a re-concentration of shareholdings has enabled shareholders actually to take advantage of the rights which company law has traditionally conferred upon them (Section II(C)).

(B) Company Law and Shareholder Control.

It is argued in this section that at the level of professed principle the goal of shareholder value sits fairly comfortably within the traditional rules of company law. Let us look first at the rules conferring appointment and removal rights in relation to directors or controlling the exercise by directors of their discretion.

Appointment and removal rights. These rules are contained in the Companies Act and are clearly consistent with the dominance of shareholder value. Although the Act in fact has little to say about the appointment of directors, and the articles of association of most companies make it difficult for shareholders to propose their own candidates for board membership, as opposed to accepting or rejecting those put forward by the board itself, nevertheless all this pales into insignificance in the light of the provisions of s 303 of the Companies Act 1985. This section permits an ordinary majority of the shareholders at any time to dismiss all or any of the directors, without giving any reason, no matter what contrary provisions may be found in the company’s articles or the director’s contract of service, subject only to an obligation to pay compensation to any director whose contract is wrongfully terminated. This must be read together with the provisions of s 368 empowering the holders of 10% of shares carrying the voting rights to requisition a speedy meeting of the company.

Of course, the compensation payable for breach of directors’ typically fixed- term contracts may be substantial and the prospect of paying it may chill the use of s 303. This has led both the statute and the corporate governance committees to promote limits on the length of directors’ fixed-terms and on the length of contractual notice periods. Nevertheless, ss 303 and 368, as they stand, are significant provisions in promoting the primacy of the shareholder interest. The UK rules contrast with those in most states of the USA where the opportunity to remove directors arises only annually and, in the case of companies with staggered boards, the whole board may be replaceable only over a number of years. In the UK, by contrast, control of the majority of the votes feeds through directly into control of the board. It seems to be mainly on the basis of these sections that Bob Monks, vice chairman of Hermes Lens asset managers, has characterised the UK as ‘easily the world leader’ in the accountability of management to investors. Rules and standards constraining the exercise of managerial discretion. With regard to directors’ duties, our concern is with the duties of loyalty, rather than of competence, and in particular with the question, whose interests must the directors promote, at least as far as the law ‘in the books’ is concerned? The formal answer to that question, as in so many European systems, is that the directors must promote the interests of ‘the company’. However, English law seems to be tolerably clear that, as far as the common law is concerned, (i) the phrase ‘the interests of the company’ is meaningless unless ‘the company’ is identified with one of more groups of people involved in the company or affected by its actions; and (ii) that ‘the company’ means the members (or shareholders), at least so long as it is a going concern.

However, the matter is not entirely free from doubt and there are those who have argued that the common law recognised a broader notion of ‘the company’ than just the shareholders (or members). If the common law required the duties to be owed to the shareholders, it has been asked, why did it not say so, instead of referring to ‘the company’ as the beneficiary of the duties? The answer, which has not convinced everyone, is that ‘the company’ is a way of referring to the shareholders collectively, for it is the shareholders as a whole, rather than individual shareholders to whom the directors owe their duties, at least in the standard case. The minority view that shareholder value is inconsistent with the traditional common law was strengthened by the enactment in 1980 of the only significant statutory change to the relevant law during the period under consideration. This was the introduction of a requirement that directors ‘have regard in the performance of their functions [to] the interests of the interests of the company’s employees in general, as well as to the interests of its members’ (now s 309 of the Companies Act 1985). This provision is grist to the mill of the opponents of shareholder value who, today, are not those who argue for nationalization but those whose analysis of the company is based upon stakeholding theory, i.e.,  the importance to the efficient conduct of business of long- term relationships not only with suppliers of equity capital but also with suppliers of other inputs and with customers. The section is a puzzling provision. At one level it was the only concrete outcome of the Committee of Inquiry on Industrial Democracy (the ‘Bullock’ Committee), which reported in 1977, and yet it was introduced by a decidedly non-corporatist Conservative government. Ever since it was introduced, it has been debated whether it operates so as to put the interests of the employees on a par with those of the shareholders or whether it simply makes the point, as was probably already the law, that promotion of the interests of the members should be implemented by policies which recognize that shareholder benefit requires the interests of the workforce to be taken into account. This issue has not been clearly resolved by the courts, partly because no special way for employees to enforce the duty, should they have thought it worth doing so, was created. However, the matter will be settled if the proposals of the Company Law Review are accepted by the legislature. These proposals are based on the primacy of the shareholder interest but re-state that interest in an ‘inclusive’ way. In March 2000 the Company Law Review produced a consultation document setting out its proposals for developing the framework of company law which it had put out for consultation a year previously. It is proposed to reformulate and embody in statute the central duty of loyalty in the following way: [A director] . . . must (so far as he practically can) exercise his powers in the way he believes in good faith is best calculated in the circumstances, taking account of both the short and the long term consequences of his acts, to promote the success of the company, for the benefit of its members as a whole. The most significant aspect of the CLR’s proposal is that it makes it explicit that the shareholders’ interests are central by replacing the phrase ‘interests of the company’ in the common law formulation with ‘for the benefit of the members as a whole’ in the proposed statutory version. Thus, it renders untenable the minority view referred to above, and removes the ambiguities generated by the reference to ‘the company’ in the common law formulation. However, clarity is achieved in a way which stresses the inclusive nature of this duty to the shareholders. In this way the document also solves the ambiguity problem generated by s 309 of the Act, mentioned above, which would presumably disappear from the statute book under the CLR’s proposals.

The CLR’s proposal can be seen as having emerged from a debate, exposed in its earlier consultative document, which constituted a more generalized version of the arguments generated by s 309. Should the law be altered so as to make the interests of all stakeholders free-standing objects of the directors’ attention, of equal status with those of the shareholders, or should the shareholders interest be given primacy, but within a framework which recognised the significance of non- shareholder interests to the company’s commercial success? In the terminology of the earlier document, was ‘pluralism’ or ‘enlightened shareholder value’ the better approach?

The CLR in the end opts for the latter. The shareholders’ interests constitute the ultimate touchstone of legality, but the ‘circumstances’ to which the directors are to have regard in promoting the success of the business for the benefit of its shareholders include the company’s need to foster its business relationships, including those with its employees, suppliers and customers; the impact of its operations on local communities and the environment; and the need to maintain a reputation for high standards of business conduct. This ‘inclusive’ way of stating the duty removes, or should remove, any impression that promotion of the shareholders’ interests requires riding rough-shod over non-member interests.

However, management is given a clear goal to work toward but is reminded and required to have regard, in the achievement of that goal, to the interests of other groups, that to be ultimate goal is the promotion of the shareholders’ interest but the interests taken into account include all other groups likely to have a long-term relationship with the company or to be affected by its decisions. The CLR thus seeks to offer something to both the shareholder value and the stakeholder camps which is the bigger gainer? At a rhetorical level probably the former. The primacy of the members’ interests is asserted. Although the phrase ‘shareholder value’ is not used, the words ‘for the benefit of its members as a whole’ probably come as close to it as is compatible with the structure of British company law. The reference needs to be to the ‘members’ rather than the ‘shareholders’ because one type of company which may be incorporated under the Companies Act does not issue shares. More important, the proposal has to refer to the ‘benefit’ of the members rather than to ‘shareholder value’ because companies incorporated under the Companies Act may be used for both profit-making and non-profit-making activities. In short, the specification of the objective of the company is a matter for the members. Nevertheless, it is clear that in the case of the company incorporated to carry on a profit-making business, the proposed formula uses shareholder value as the touchstone for the core directors’ duty. What ought to be welcomed by the stakeholder proponents is the endorsement by the proposed formula of their theories as to how companies generate value for shareholders, ie by building sustainable relations with the other specified groups. Indeed, at the level of the impact of the formula on the behaviour of companies, the stakeholder proponents seem likely to be the bigger gainers. As we shall see below, the features of the common law formula which make it such a weak tool in litigation have been retained in the CLR’s proposals. However, the enforcement of the inc lusive aspect of the duty is envisaged as occurring, not via litigation, but through an enhanced annual reporting requirement for companies. At least for large companies it is proposed that an Operating and Financial Review, based partly on existing non-mandatory Accounting Standards Board guidance, should become compulsory and, where relevant, the OFR would cover the company’s handling of its relations with stakeholders. The success of this project will probably depend largely upon the ability of the accounting bodies to develop standards which prevent companies from taking refuge in merely self-serving statements and upon the skill of auditors in applying those standards. Nevertheless, sensitizing central management to the impact of its decisions on non-shareholder groups is more likely to be achieved, in the writer’s view, by regular, standardized reporting, which will facilitate the mobilization of public opinion by stakeholder representatives, than by occasional litigation based on subjectively conceived obligations.

One may conclude this section by stating that, in relation to both appointment and removal rights and the standards governing the exercise of directors’ discretion, British law is, and has been throughout our period, compatible with the promotion of shareholder value. This is certainly the case in relation to removal rights; the majority view of the scope of directors’ duties, as they are currently formulated, is also consistent with a shareholder value approach; and the CLR’s proposals, if adopted, will make this compatibility explicit, whilst also suggesting that shareholder value is not inconsistent with fair dealing with the interests of other stakeholding groups. Thus, the first leg of our hypothesis is established. It was not the state of the law at the time when Crosland wrote which rendered shareholders impotent in large companies. Company law, in fact, gave primacy to their interests, but the mechanisms by which it attempted to promote the shareholders’ interests were not ones of which shareholders were able effectively to avail themselves. This enables us to move forward to consider the second leg of the hypothesis: that a change has occurred in the dispersion of shareholdings which has mitigated the factual weakness of the shareholders. They are now able to make effective use of the tools which company law has always provided to them.

 (C) The Re-Concentration of Shareholdings and the Utilization of Company Law

As we have seen, Crosland attributed the weakness of shareholders to the dispersion of shareholdings, which reduced the incentive of shareholders to use their control rights, as provided by company law, and generated instead an incentive to sell in the market if they were disappointed with the company’s performance. Dispersed shareholdings were equated, in short, with a preference on the part of shareholders for ‘exit’ as against ‘voice’. The re-concentration of shareholdings in the hands of a smaller number of larger shareholders holds out the prospect that the traditional internal governance rules of company law will recover their potency, because re-concentration substantially reduces shareholders co-ordination problems. This supports the hypothesis that the significant change which occurred during the post-war period was not the company law was altered (in fact, it did not) but that changes outside the law significantly altered the practical significance of that law. Crosland’s fundamental argument that shareholders neither wished nor were able to exercise their control rights would thus begin to appear less persuasive (as perhaps would his argument that there was not much social improvement to be gained by reviewing company law). If the ‘functionless’ shareholder in fact begins to function, we have squarely face up to the issue, as the CLR does, of whether allocating control rights exclusively to shareholders is the best policy.

That shareholdings in the UK have become to some significant degree re-concentrated in recent decades is well established. Pressures on individuals, to make provision for retirement outside the wholly inadequate state system of support in old age, has resulted in the UK in an enormous flow of savings onto the stock market. Also well known is the consequence of these flows in terms of patterns of shareholding, i.e., a decline in the proportion of shares held by individuals and a rise in the proportion held by institutional shareholders, especially pension funds and insurance companies. The most recent figures suggest that this is a process which has now run its course, partly because funds established in the post-war period have reached maturity and partly because new governmental solvency requirements are pushing managers towards a re-balancing of their investments in a manner which is more favorable to fixed-interest securities, whether governmental or corporate. Nevertheless, the change over the period with which we are concerned has been substantial.

Of course, re-concentration at the level of the market as a whole is less relevant for the use of internal accountability mechanisms than re-concentration at the level of individual companies, but research shows that re-concentration at the one level has flowed through into re-concentration at the other, especially if attention is focused on re-concentration of voting rights, rather than on ownership, i.e., on the fund managers who usually have the power to exercise the voting rights of a number of institutional shareholders. Relatively small coalitions of shareholders are able jointly to control shares which probably represent a majority of the votes likely to be cast at general meetings, at least outside the very largest companies quoted on the London Exchange. This is a far cry from the ‘Berle & Means company’ which Crosland had in mind.

Re-concentration and directors’ duties. Although the change in the levels of concentration of shareholdings in listed companies in the UK is well established, one still needs to ask the question: is the factual level of re-concentration so far achieved capable of restoring to shareholders the power to use the traditional control instruments of company law? There are reasons for being cautious about giving an unqualifiedly positive answer to the question, but the reasons for caution differ as between shareholders’ removal rights and directors’ duties. We therefore examine each separately, beginning with the latter.

As far as the enforcement of directors’ duties by litigation is concerned, there is an important issue related to the formulation of the directors’ core duty to promote the interests of the company which needs to be noticed before one turns to the question of how shareholders might organize themselves effectively to enforce the duty. There are good reasons to think that, in the case of this basic duty, a significant obstacle to greater litigation is the substantive formulation of the legal rule. The duty to act bona fide in the best interests of the company is a duty to act in what the directors think, not what a court may think, is in the best interests of the company. This is the classic, subjective formulation of a duty designed to catch only egregious examples of failure to promote the shareholders’ interests. Only if no reasonable director could possibly think that the challenged decision was in the shareholders’ interests (or if the directors have rashly left evidence of that they did not put the shareholders first) will their action be subject to review by the courts. Nor does the law seek to specify a time-frame over which the shareholders’ interests should be maximized.. The duty is owed, it has been said, to present and future members, an inelegant formulation which is open to the criticism that a duty cannot be owed to an unidentified class of people, but the purpose of this formula seems clear enough. Thus directorial action which appears contrary to the interests of the shareholders in the short term may be defended on the grounds that it will maximise their utility over the longer term and the legal rule does not purport to constrain the directors in favour of the former time-frame So, if ‘short-termism’ is a problem in the conduct of UK companies, then the fault does not lie with the way the law is formulated, though there is some evidence that it may lie, in part, with the way in which the law is perceived. It should be noted that these features of the basic duty of directors are retained in the Company Law Review’s reformulation of the duty, quoted above in sub-section (B). The duty is still formulated in a subjective way and it now explicitly requires directors to take into account both the long-term and short-term impact of their decisions on shareholders’ utility. Of course, the whole of the law on directors’ duties is not formulated on a subjective basis. When it comes to directors’ duties to remain within the bounds set by the company’s constitution or to avoid conflicts of interest, the duties are formulated objectively. However, these duties catch only particular aspects of directors’ conduct. A decision which does not directly further the personal interests of the directors is unlikely to be capable of challenge under the conflicts rule, if all that can be said of it is that another decision might have served the shareholders’ interests better. The overarching legal duty remains a subjectively formulated one, which is in consequence of limited impact in practice.

Even if these problems relating to the substantive formulation of directors’ duties were solved, there would remain the question of whether shareholders can effectively enforce it. It is true that the legal rule is that, where directors are alleged to be in breach of their duties to the company, the power to initiate litigation on the company’s behalf (which articles of association normally vest exclusively in the board), is given also to the general meeting of shareholders. In principle, therefore, the collective action problems which shareholders face when seeking to mobilise a majority in the general meeting in favour of litigation ought to be relevant and, by the same token, the re-concentration of shareholders ought to increase the likelihood of shareholders decisions in favour of litigation. Alternatively, the shareholders might use, or threaten to use, the removal rights, discussed in the next sub -section, either to persuade the existing board to take legal action on behalf of the company or to install a new board which will initiate the litigation. Thus, if the problems relating to the substantive formulation of the law were resolved, there might open up the same debate about shareholders’ decisions collectively to initiate litigation as has arisen in relation to their power to remove directors – and with the same explanation (see below) as to why this power is not utilised to the optimal extent.

However, it is possible to conceive of the right to initiate litigation on the company’s behalf being delegated further within the company, to some subset of the shareholders as a whole or even to the individual shareholder. This is the area of the ‘derivative action’, which has been the main driver of litigation to enforce directors’ duties in the United States. By contrast, however, British company law is extremely reluctant to recognise further delegation within the shareholding body of the right to sue. The notorious ‘rule in Foss v Harbottle’ at present tightly constrains the locus stand of individual or minority shareholders to complain of breaches of duty by directors. The Law Commission has proposed reform by vesting discretion in a judge to determine whether it is in the best interests of the company to permit derivative action to proceed. It is not evident that the proposals will produce a significantly higher level of enforcement of directors’ duties. Although criticising the obscurity of the present law, the Commission endorsed the policies underlying the current restrictive standing requirements. If this attitude informs the exercise by the judges of their proposed discretion, significantly higher levels of litigation may not emerge. Re-concentration and directors’ removal rights. When one moves from the enforcement of directors’ duties to the utilisation of shareholders’ removal rights, however, the re-concentration of shareholdings seems likely to be more significant. The right of an ordinary majority of shareholders to remove all or any of the directors at any time and for any reason is a strong rule, qualified only by the absence of a cap on the damages which a company may have to pay for breach of contract, a lack which the Combined Code has begun to address. However, effective use of the section does require that shareholders be able to surmount their collective action problems. This has been recognised as a difficulty in the past, but it is a problem which re-concentration of shareholdings would seem directly to address. So, is it the case that shareholder value has found its main legal expression in greater use by shareholders of their removal rights as against directors?

The first point to makes is that it is wrong to test the impact of the removal right by establishing simply the extent to which it has been used. One needs to take into account as well the extent to which the threat of its use has been effectively deployed. There are good reasons connected with the costs of intervention why institutional shareholders should initially use their removal right as part of a private bargaining process with the incumbent management in which the shareholders seek in private a change of policy from the board or the resignation of its leading members. Research has indeed shown that the level of institutional utilisation of – or of the threat to utilise – removal rights has increased in recent years. However, and this is the second point to be made, the level of that activity still seems to have fallen below its full potential and this has led influential critics to berate institutional shareholders for failing to extract full value from the rights which company law gives them. What is the explanation for the under-utilisation? Although the long-standing removal right conferred upon a simple majority of the shareholders by the Companies Act has been given a new practical significance by the re-concentration of shareholdings, this new possibility for ‘voice’ has been added to, but has not repla ced, the alternative exit strategy for institutional shareholders. For fund manageers and institutional shareholders faced by an under-performing portfolio company, the revival of the removal right has created a choice between its exercise and the traditional exit strategy via a sale in the market or to a take-over bidder. It seems likely that the shortfall in potential use of the removal right can be explained largelyby the fact that, from the point of view of the fund manager, exit is the less costly choice than the exercise of voice in many cases, for example, where the institution can engineer a bid for the company. It should be remembered that pressures of competition for mandates among fund managers has made them highly cost-sensitive.

Fund managers have an incentive not to join activist coalitions, both because they may then be able to free ride on the efforts of others and because it will often be uncertain whether, if they do join in, the costs of intervention will be outweighed by the subsequent increase in the company’s share price. Finally, it needs to be borne in mind that, in the case of managers which are part of financial conglomerates, intervention raises conflicts of interest. Thus, a fund manager which has taken an activist stance as against the management of a particular company may find that it has prejudiced the chances of the corporate finance arm of the firm to obtain their kind of work from that company. It is perhaps not surprising that the most publicly activist institutions are those which do not suffer from such conflicts of interest because they are single function bodies.

Conclusion This section set out to explore the hypothesis that, in the absence of any significant relevant change in company law, the rise to prominence of shareholder value was to be explained by reference to changes in the factual context in which company law operated, changes brought about, in particular, by a re-concentration of shareholdings. The first leg of this hypothesis is well supported: British company law is based upon the idea of investor control and so allocates control rights to shareholders. The second leg of the hypothesis was that the change in factual context enabled shareholders to exercise the control rights which company law gave them in a way which they previously they had been unable to do. Re-concentration of shareholdings turned out to be a less significant fact in relation to both the enforcement of directors’ duties and the removal of directors than might have been expected. So we are left still search for a complete explanation for the rise of shareholder value in a context of unchanging company law. The operation of traditional company law in a new factual context may constitute part of the explanation for the rise in shareholder value but not the whole of it.

(Edited by: China West Lawyer)