Corporate Governance: 'Shareholder Primacy'

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necessary_illusions
necessary_illusions's picture

Hello Friends,

I am wondering if anyone has more information about the legal history and basis for the idea of 'Shareholder Primacy' in corporate governance. As I understand it, this is basically the idea that corporations are beholden to the enrichment of their shareholders as a primary directive.

I believe there was a Supreme Court decision in the early part of the twentieth century (or thereabouts) that established that corporations need to operate for the enrichment of shareholders, however, I can't find a related case. The bottom line is that I'm interested in the legal constraints that make corporations beholden to increasing their shareholder's value.

Any information available is much appreciated. Thanks.