If every stock owner participated in
each decision in a corporation, not only
would large bureaucratic costs be incurred,
but many would shirk the task of
becoming well informed on the issue to be
decided, since the losses associated with
unexpectedly bad decisions will be borne
in large part by the many other corporate
shareholders. More effective control of
corporate activity is achieved for most
purposes by transferring decision authority
to a smaller group, whose main function
is to negotiate with and manage (renegotiate
with) the other inputs of the team. The
corporate stockholders retain the authority
to revise the membership of the management
group and over major decisions that
affect the structure of the corporation or
its dissolution.