De Kluyver starts with the description of shareholders. Shareholders own companies but do not run companies. Instead, they elect directors to appoint managers to run the companies. Different shareholders have different goals for the corporations. However, “the welfare of shareholders should be the primary goal of the corporation stems from shareholders’ legal status as residual claimants” (De Kluyver, p3). Then he mentions that corporate law was designed to cope with the relationship between the officers, the board of directors, and shareholders (p6). Corporate law is considered part of private law that based on four key premises: (a)indefinite life, (b) legal personhood, (c) limited liability, and (d) freely transferable shares (De Kluyver, p6). Later, he introduces that the objective of the Securities and Exchange Commission is to protect investors and to maintain the markets justly and efficiently. He then gives a brief history of corporate governance in America, providing several evidences caused by corporate governance.
Chapter two focuses on the argument on “the board’s responsibilities to shareholders versus the rights of all company stakeholders” (De Kluyver, p25). De Kluyver cites a statement from Lipton that directors are not only responsible for satisfying the shareholders’ interests; instead, “the role of the board is simply and dutifully to seek what is best for the company itself, which means balancing the interests of shareholders as well as other stakeholders” (De Kluyver, p26). On the other hand, he also cites other argument that is on the opposite side of this