ABSTRACT
Since Berle and Means (1932) documented the prevalence in the United States of corporations that are incapable of effective control by their shareholders, the study of corporate regulation has focused on controlling the abuse of power and resources by those who manage the corporation. Management, thereafter, came to be regarded as the central constituency of the firm, and scholarship divided along pro-and anti-managerial lines, according to the perception of how responsibly management might act (Bratton 1989). Since the late 1970s, considerable attention has been paid to the means by which contracts and markets are capable of motivating managers to act consistently with the interests of shareholders. These include the use of incentive compensation, including stock options, and the effects ·of takeovers and capital raising.
