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In her delightful and provocative essay, Why We Should Stop Teaching Dodge v. Ford, Professor Lynn Stout manages simultaneously to make too much and too little of the famous decision thwarting Henry Ford’s apparent effort to steer the powerful automobile company he controlled away from the pursuit of profit maximization as the single-minded purpose of the corporation. Professor Stout makes too much of the case when she asserts that “[m]uch of the credit, or perhaps more accurately the blame, for this state of affairs can be laid at the door of . . . the 1919 Michigan Supreme Court decision in Dodge v. Ford Motor Company.” This is wrong, since the Michigan Supreme Court is merely the messenger here. As Professor Stout rightly points out, the Michigan Supreme Court has not innovated much in the world of corporate governance, and this case is no exception. The court certainly cannot rightly be credited (or, if Professor Stout is to be believed, blamed) for inventing the idea that the purpose of the public corporation is to maximize value for shareholders.
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