Sarah Haan Publishes “Voting Rights in Corporate Governance” in the Southern California Law Review The article looks at current instability involving corporate shareholder voting rights, examining it through a historical lens.

By Law Communications
March 11, 2024

Washington and Lee law professor Sarah Haan has published an article in the Southern California Law Review. The article, “Voting Rights in Corporate Governance: History and Political Economy,” looks at current instability involving corporate shareholder voting rights, examining it through a historical lens.

A small but potent literature has explored the historical evolution of nineteenth-century shareholder voting rights in corporate law, establishing that per-share vote allocations changed significantly over that century. This literature, which focuses on the shift from “democratic” vote allocations (one-person-one-vote and restricted voting) to “plutocratic” voting (one-share-one-vote), has treated vote allocations as the exclusive determinant of shareholder voting power. The literature has raised as many questions as it has answered, and it ultimately has failed to produce agreement among scholars or a cohesive narrative to explain how or why the modern framework for shareholder voting rights emerged.

This Article presents an alternative account of transformations in shareholder voting rights that tracks three evolving sets of legal rules. It shows how the voting-rights framework that was cemented by the end of the century—the framework that would go on to define twentieth-century corporate control—was determined by the interrelation of the three. One regulated the shareholder’s right to delegate votes (proxy voting), another set per-share vote allocations, and a third addressed the shareholder’s right to cumulate votes (cumulative voting). The Article shows why these three sets of rights must be understood as coactive and interdependent. It contributes new ideas to the longstanding debate about why American corporate law shifted to the rule of one-share-one-vote and concludes by returning to the present moment, arguing that shareholder voting rights have become newly unsettled through shifts along these same fault lines.

The article is available online at the University of Southern California Law Review website.

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