From Trust to Contract: The Legal Language of Managerial Ideology, 1920–1980

Abstract

Although the managerial function arises out of organizational needs imposed by market competition and technological development, managers' professional status has come in large part from legal conceptions that perceive the managerially run firm as an institutional bulwark for modern democracy. This article examines how the law, through its doctrines of trust and contract, has made and unmade management as a semi-public profession. The article explores the history of tender-offer regulation as a case study of this process.

The Convergence of Disclosure and Governance Practices in the World’s Largest Firms*

“…At the beginning of the 1990s each corporate governance model reflected specific contextual conditions such as economic, political, historic, and cultural conditions. However, the 1990s saw a boom in institutional investor activity, where the presence of large institutional investors led to the new view that the firm is a "self-regulating contractual arrangement among independent bargaining groups" (Kaufman and Zacharias, 1992). This arrangement allows the internal mechanisms of control to hold managers accountable based on improved disclosure and transparency of firm activities.…”

Behavioral Economics, Federalism, and the Triumph of Stakeholder Theory

“…Both trust and contract come into play in the legal definition of the firm. Yet, they uneasily amalgamate into the business corporation (Kaufman and Zacharias, 1992).…”

Democracy and the Evolution of Corporate Governance

“…These historical changes notwithstanding, one cannot describe the adoption of the procedures of democracy in corporate governance as a straightforward process (cf. Kaufman and Zacharias, 1992). In effect, the managerial revolution leads to the replacement of the old capitalist aristocracy by a new capitalist technocracy (Stanworth and Giddens, 1974).…”