Revisiting Berle and Rethinking the Corporate Structure

Adolf Berle and Gardiner Means painted what remains a defining portrait of corporate law. The separation of ownership and control they described and the agency costs it causes are still a central concern of the law of corporate governance. For that reason, Berle’s work is relevant nearly eighty years after its publication. Seemingly forgotten, however, is that Berle’s enduring description of the corporate structure was published before most of today’s corporate law was in place.

His work preceded the Securities Act of 1933 and the Securities Exchange Act of 1934 and even preceded the dominance of Delaware common law in the field of corporate governance. Berle’s prescience is part of why his work is still so important to the development of the corporate law, but relying upon and taking for granted his observations has locked corporate law scholars and jurists into a paradigm that may no longer fit and that may be keeping us from moving forward as we ought to.