Securities Intermediaries and the Separation of Ownership from Control

The Modern Corporation & Private Property is a paradigm-shifting analysis of the modern corporation. The book is perhaps best known for the insights of Berle and Means about the separation of ownership from control and the consequences of that separation for the allocation of power within the corporation. The Berle and Means story focuses on the shareholder as the owner of the corporation. Berle and Means saw the mechanism of centralized management—in which the shareholder retains the economic interest but not the control rights associated with ownership—as threatening the conception of shareholder interests in terms of property rights.

In particular, they viewed the shareholder’s role as evolving from that of a traditional owner to that of a “supplier of capital, a risk-taker pure and simple.”