1991]A POLITICAL THEORY OF THE CORPORATION 15 s11 Few i are position.Although banks,insurance companies.mutual funds and pension funds have enough money,they do not take large positions. yfinancial institutions do not because would fail to be believe they But e rom the past tantalizing prospects General Motor the largest American industrial corpora tion-today has no controlling shareholder.But once it had one.Du Pont owned 25%of GM until the courts ordered antitrust divestiture. In the 1920s,an ineptly managed GM neared bankruptcy.Its manage ment was reinvigorated by neither a p stile takeo mor a leverage oxy fight,nor a h t in react on to th e prospect ofa takeover,but by the intervention of Detroit.rcorganized the company and installd w anaerSm larly,the J.P.Morgan investment bank monitored many of the country's railroads when reorganizing them at the turn-of-the-century.13 Certainly con entrated control by financial institutions is imagina ble:Japanese and German corporate ownership is quite concentrated; their financial institutions are more actively involved in their companies than are financial institutions in the United States.14 Daimler-Benz,the attomotve concem that is the largest Wrenan industrial company,has a 28%shareholder. Deutsche Ba nk ma erial inf ng re the company withou ban Dameseniot management without the replaced of a hostile takeover.15 The result in Germany- -like GM during the du Pont intervention-should be contrasted with the recent result in the United States when financial institutions(in this instance,public pe the selecti n of the next rebuffed them i6 If Ame ncan financia institu tions had a stake in GM approaching that controlled by Deutsche Bank in Daimler-Benz.that rebuff would have been difficult. Lehn,The Struc Econ,he structure of Corporate Ownership:Causes and Consequences,98 J.Pol. com:M.Ei laaiopanisnhnememaiharchodnn T1、 g4559 (1976(6 udies show that 10%blocks.while n ore thar one-third of the various s les of large firms). 12.A.Chandler S.Salsbury,Pierre S.du Pont and the Making of the Modern on V Ca 0(1971) 371-72987:RC80 onal Bankers 1854-1913,at 44 00 14.See Aoki,Toward an Economic Model of the Japanese Firm,28 J.Econ.Litera- ture 1,14(1990);Ingersoll,The Banker Behind the Shakeup at Daimler-Benz,Bus.Wk., Juy21986 36 r Muscle,N.Y.Times,Feb.11,1990,,at 13, col.2. 1991] A POLITICAL THEORY OF THE CORPORATION 15 Few of the largest public firms are controlled by a holder of a sub￾stantial block of shares. " Few individuals have the wealth to take that large a position. Although banks, insurance companies, mutual funds, and pension funds have enough money, they do not take large positions. Possibly financial institutions do not because they believe they would fail to be effective. But examples from the past offer tantalizing prospects. General Motors-the largest American industrial corpora￾tion-today has no controlling shareholder. But once it had one. Du Pont owned 25% of GM until the courts ordered antitrust divestiture. In the 1920s, an ineptly managed GM neared bankruptcy. Its manage￾ment was reinvigorated by neither a proxy fight, nor a hostile takeover, nor a leveraged buyout in reaction to the prospect of a takeover, but by the intervention of its large shareholder. Pierre du Pont moved to Detroit, reorganized the company, and installed new managers.' 2 Simi￾larly, theJ.P. Morgan investment bank monitored many of the country's railroads when reorganizing them at the turn-of-the-century.' 3 Certainly concentrated control by financial institutions is imagina￾ble: Japanese and German corporate ownership is quite concentrated; their financial institutions are more actively involved in their companies than are financial institutions in the United States.' 4 Daimler-Benz, the automotive concern that is the largest German industrial company, has a 28%o shareholder, Deutsche Bank. When managerial infighting re￾cently left the company without clear direction, the bank replaced Daimler-Benz' senior management without the organizational violence of a hostile takeover.' 5 The result in Germany-like GM during the du Pont intervention-should be contrasted with the recent result in the United States when financial institutions (in this instance, public pen￾sion funds) sought to influence the selection of the next chairman of GM; GM management rebuffed them.16 If American financial institu￾tions had a stake in GM approaching that controlled by Deutsche Bank in Daimler-Benz, that rebuff would have been difficult. Lehn, The Structure of Corporate Ownership: Causes and Consequences, 93 J. Pol. Econ. 1155, 1173-76 (1985) (comparing companies with fragmented shareholders to companies with concentrated stockholders). 11. M. Eisenberg, The Structure of the Corporation: A Legal Analysis 45-52 (1976) (studies show that 10%o blocks, while not unheard of, were found in no more than one-third of the various samples of large firms). 12. A. Chandler & S. Salsbury, Pierre S. du Pont and the Making of the Modem Corporation 457-560 (1971). 13. See V. Carosso, The Morgans: Private International Bankers 1854-1913, at 371-72 (1987); R. Chernow, The House of Morgan 44 (1990). 14. See Aoki, Toward an Economic Model of theJapanese Firm, 28J. Econ. Litera￾ture 1, 14 (1990); Ingersoll, The Banker Behind the Shakeup at Daimler-Benz, Bus. Wk., July 27, 1987, at 36. 15. Ingersoll, supra note 14, at 36. 16. Lorsch, Funds Should Flex Their Muscle, N.Y. Times, Feb. 11, 1990, § 3, at 13, col. 2