Chapman Law Review


Corporate law provides residual claimants with key legal protections and rights, including fiduciary duty protections and voting rights. Under the conventional corporate law framework, shareholders are seen as the residual claimants of corporations because they are the parties who receive the residual profits of the corporation. This profit-oriented view of residual claimancy, however, is incomplete because it considers only one of the multiple criteria that are relevant to residual claimant analysis. In addition to profits, various other criteria have been used to identify the residual claimant of corporations over time, such as the variability of rewards, the wealth effects of one’s decisions, firm-specific investments, risk of loss, and monitoring capacities. The decision to rely on a single criterion (profit) to determine that shareholders are the exclusive residual claimants of corporations is, then, a policy choice that preferences one dimension of residual claimancy over others. This policy choice has had a profound impact on how corporate power and value are distributed in our society. This Article outlines a multicriteria assessment of corporate residual claimants which contemplates a more diverse conception of the residual claim and that could be used to broaden the group of stakeholders that are entitled to enjoy residual claimant protections and rights.



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