The Choice of Values Behind Corporate Law: A Critique of Shareholder Primacy and a Response to China's Proposal

Abstract

The theory of shareholder primacy, as an important value judgment in the U.S. corporate law on corporate governance model, has influenced the shaping of legal rules of corporate governance in different countries and regions of the world, as well as the revision of China's corporate law. The theoretical lineage of shareholder-centrism has its own peculiar soil of existence and should not be regarded as a universal value behind the norms of corporate law. Even in the U.S., shareholder primacy is highly controversial, and the direction it advocates is contradictory to the reality of corporate governance practices. China has not been affected by the shareholder primacy debate in the current revision of its corporate law, but has adopted a corporate power allocation model with Chinese characteristics, so as to achieve a balance between the efficiency of corporate governance and the protection of shareholders' interests.