Minority Shareholders Rejoice: Controlled Firms Can Maximize Value Through Flexible Contracts
The article discusses how companies with a small group controlling them can still benefit all shareholders. By finding the right balance of control, the group can maximize profits for everyone. To ensure this, there needs to be a way for the controlling group to commit to not taking more than their fair share. This can be achieved through legal rules and private agreements. In countries with weaker legal systems, alternative methods are explored to ensure fair treatment for all shareholders.