Voting (Insincerely) in Corporate Law

Goshen, Zohar

Voting lies at the center of collective decision-making in corporate law. While scholars have identified various problems with the voting mechanism, insincere voting—in the forms of strategic voting and conflict of interests voting—is perhaps the most fundamental. This article shows that insincere voting distorts the voting mechanism at its core, undermining its ability to determine transaction efficiency. As further demonstrated, strategic and conflict of interests problems frequently coincide with one another: voting strategically often means being in conflict, and many fact patterns present aspects of both problems. Finally, this article claims that although the two problems have seemingly different solutions, these solutions are essentially similar in nature: all solutions to insincere voting are variations on two basic rules, namely, property rules and liability rules.


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Theoretical Inquiries in Law

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Academic Units
Berkeley Electronic Press
Published Here
May 5, 2016