have been assigned to the corporation by the initial investors, none of the participants in the enterprise own those assets any more. nor do they own the output of the firm. nor do they own the assets has investors, but does not have any "owners"in the way people normally use that wag poration itself subsequently added by the reinvestment of profits or by injections of new capital. The cor Corporations have"shareholders", of course. Shareholders are often casually referred to as the"owners "of corporations. But shareholders do not have the set of rights and responsibilities that we associate with"ownership"in other contexts. Shareholders do not directly own any of the assets used in production, nor do they own the output of the firm. They do not directly make any of the decisions about the use of the assets. They do not even bear full liability for the activities of the firm Instead, what shareholders get in exchange for their initial contribution of resources to the corporation are specialized claims against the enterprise that come with some very limited rights Shareholders subsequently own their shares in all the ways that we normally mean when we say someone"owns"something. They bear the risk associated with the shares, they reap the gains, they can sell the shares, or transfer ownership to someone else, or otherwise control the disposition of the shares. But that is not the same as saying that they "own the corporation itself. One could argue that the point is merely a semantic one. But of the last two decades, the language of ownership has been used as a trump card, to curtail debate about the social and legal purpose of corporations. Hence it is useful to examine the use of this fully s9ompl. he legal fact is that none of the participants in the activities of a given corporation have the full ment of rights and claims and responsibilities that we normally associate with"ownership" and at, when bundled together, are supposed to fill in the gaps in incomplete contracts and provide appropriate incentives. Not the shareholders, not the directors, not the managers, not the creditors, not the employees. As a legal matter, and as a description of the economic realities, there are no"owners So, the paradox is, if ownership" is so important to the functioning of a capitalist economy, why does corporate law break up the bundle of claims and responsibilities that we normally associate with"ownership", and assign different parts of the bundle to different players? Why are there no owners"of corporations? See discussion of shareholders as"owners"in Blair(1995)p. 223-225, and also discussion of the"property conception"of the corporation, p. 208-210 I first challenged the appropriateness of the use of the word"ownership"in the corporate context in Blair(1995)p. 16-193 See discussion of shareholders as “owners”in Blair (1995) p. 223-225, and also discussion of the “property conception” of the corporation, p. 208-210. 4 I first challenged the appropriateness of the use of the word “ownership” in the corporate context in Blair (1995) p. 16-19. 3 have been assigned to the corporation by the initial investors, none of the participants in the enterprise own those assets any more. Nor do they own the output of the firm. Nor do they own the assets subsequently added by the reinvestment of profits or by injections of new capital. The corporation itself has investors, but does not have any “owners” in the way people normally use that word. Corporations have “shareholders”, of course. Shareholders are often casually referred to as the “owners” of corporations. But shareholders do not have the set of rights and responsibilities that we associate with “ownership” in other contexts. Shareholders do not directly own any of the assets used in production, nor do they own the output of the firm. They do not directly make any of the decisions about the use of the assets. They do not even bear full liability for the activities of the firm3 . Instead, what shareholders get in exchange for their initial contribution of resources to the corporation are specialized claims against the enterprise that come with some very limited rights. Shareholders subsequently own their shares in all the ways that we normally mean when we say someone “owns” something. They bear the risk associated with the shares, they reap the gains, they can sell the shares, or transfer ownership to someone else, or otherwise control the disposition of the shares. But that is not the same as saying that they “own” the corporation itself. One could argue that the point is merely a semantic one. But in corporate governance debates of the last two decades, the language of ownership has been used as a trump card, to curtail debate about the social and legal purpose of corporations. Hence it is useful to examine the use of this language carefully4 . The legal fact is that none of the participants in the activities of a given corporation have the full complement of rights and claims and responsibilities that we normally associate with “ownership” and that, when bundled together, are supposed to fill in the gaps in incomplete contracts and provide appropriate incentives. Not the shareholders, not the directors, not the managers, not the creditors, not the employees. As a legal matter, and as a description of the economic realities, there are no “owners” of corporations. So, the paradox is, if “ownership” is so important to the functioning of a capitalist economy, why does corporate law break up the bundle of claims and responsibilities that we normally associate with “ownership”, and assign different parts of the bundle to different players? Why are there no “owners” of corporations?