Document Type
Article
Publication Date
2013
DOI
https://doi.org/10.1628/093245613X660537
Abstract
We ask how to regulate pecuniary private benefit consumption. These benefits can compensate controlling shareholders for monitoring managers and investing effort in implementing projects. Controlling shareholders may consume excessive benefits, however. We argue (a) ex post judicial review of controlled transactions dominates ex ante restrictions on the controlled structures: the latter eliminate efficiencies along with abuses of the controlled company form; (b) controlling shareholders should be permitted to contract with investors over private benefit levels. Both work with better courts. Hence, we recommend creating a European-level corporate court, whose jurisdiction parties can invoke by contract.
Disciplines
Business Organizations Law | Contracts | Law
Recommended Citation
Ronald J. Gilson & Alan Schwartz,
Constraints on Private Benefits of Control: Ex Ante Control Mechanisms Versus Ex Post Transaction Review,
169
JITE
160
(2013).
Available at:
https://scholarship.law.columbia.edu/faculty_scholarship/1759