Document Type
Article
Publication Date
2026
Publication
Washington University Law Review
Volume
103
Abbreviation
Wash. U. L. Rev.
First Page
1401
Abstract
Democracy is a compliance cost. At least, that is the modern conception of performative corporate governance. Structurally contingent legal and market characteristics mean that shareholder voting is now conducted with an unusual combination of zealous devotion to the voting process and general ambivalence as to substantive outcomes.
This dynamic arises because financial and voting rights are routinely decoupled, resulting in a fundamental transformation of the incentives, constraints, and power dynamics through which the world’s largest corporations are governed. The ironic result is that the governance actors with the greatest power often have little incentive to use it. Regulators have “solved” this problem by mandating that they do so—that is, the intermediary agents who dominate modern shareholder democracy generally must vote whether they wish to or not. As a consequence of the interplay between a regulatory obligation to vote and weak financial incentives to do so, these agents have developed a privately optimal strategy of high-volume, low-value, non-firm-specific, and compliance-oriented governance activity, which this paper terms “mass corporate governance.”
While mass corporate governance is privately optimal from the perspective of intermediary agents, it imposes significant costs on investors and society at large. This Article makes a key contribution to the literature by developing a comprehensive strategic framework for assessing limits on intermediary agency costs. It concludes that no extant or proposed policy effectively constrains the governance discretion of intermediaries, and it argues that fighting to constrain discretion is an improper—and ultimately futile—frame of reference. Ultimately, the Article proposes policy solutions that not only benefit investors and the corporate governance system, but also help to limit the concentration of corporate governance power, benefit American labor interests, and mitigate the anticompetitive effects of common ownership.