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Abstract

One aspect of the problem in trying to align a corporate investment horizon (the time period for return on investment) to that of its shareholders is the enormous range of investor time horizons, which can range from milliseconds to centuries. A second aspect of the problem is whether ownership of shares equates to ownership of the corporation. A third aspect of the problem is that, despite the theories and advocacy of shareholders being owners, based on the agency model of corporate finance first developed in the 1970s, the theory is contrary to corporate law. These three aspects will be developed in this Article to urge that the question of investor time horizons should be largely irrelevant to the corporate investment decisions for publicly-traded corporations. Instead, directors should abide by their corporate-law mandated fiduciary duties to invest and manage the company in the company’s own best interest. This looks more like a conservatorship of the corporation itself and less like a principal–agent relationship. The conservatorship should consider the best interests of the corporation, various classes of shareholders (common and preferred), other investors of capital (debt holders), and other stakeholders.

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