In assessing the significance of stockholders'
power it is not the usual diffusion
of voting power that is significant but instead
the frequency with which voting
congeals into decisive changes. Even a
one-man owned company may have a
long term with just one manager-continuously
being approved by the owner.
Similarly a dispersed voting power corporation
may be also characterized by a
long-lived management. The question is
the probability of replacement of the
management if it behaves in ways not acceptable
to a majority of the stockholders.
The unrestricted salability of stock and
the transfer of proxies enhances the probability
of decisive action in the event current
stockholders or any outsider believes
that management is not doing a good job
with the corporation. We are not comparing
the corporate responsiveness to that
of a single proprietorship; instead, we are
indicating features of the corporate structure
that are induced by the problem of
delegated authority to manager-monitors