Making directors dependent on shareholders could counter some of the factors that incline directors to pursue their own interests or those of executives rather than serve shareholders. It could make the desire to be re-elected a positive force rather than a negative one. It could provide directors with an incentive to develop a reputation for serving shareholders. It could perhaps instill in directors a sense of loyalty towards shareholders …

The case for management insulation from shareholder intervention does not follow from informational advantages that management has over shareholders or from the requirements of centralized management. Nor is it justified by fears that shareholders would use their powers too little, too much, or in the wrong ways. Furthermore, reducing management insulation can significantly contribute to addressing major problems of corporate governance that have long troubled financial economists and legal scholars.