v8n2: Sollars and Tuluca Respond to Silver on Portfolio Theory and Shareholder PrimacyPosted: April 8, 2020
A RESPONSE TO Kenneth Silver (2019), “Modern Portfolio Theory and Share- holder Primacy”, Bus Ethics J Rev 7(6): 34–39, https://doi.org/10.12747/bejr2019.07.06
Kenneth Silver (2019) criticizes our (Sollars and Tuluca 2018) use of the Capital Asset Pricing Model (CAPM) to determine the return on investment that is deserved by shareholders, and suggests shareholder primacy follows from the principal/agent model, rather than a concern for risk. We argue that Silver has misunderstood CAPM and our use of it, and that, under current law, more is required from articles of incorporation or corporate bylaws for the principal/agent model to apply to corporations.
To download the full PDF, click here: Sollars and Tuluca on Silver
Gordon G. Sollars is an associate professor of management in the Silberman College of Business at Fairleigh Dickinson University, with interests in shareholder liability, worker exploitation, and product liability.
Sorin A. Tuluca is a professor of finance in the Silberman College of Business at Fairleigh Dickinson University, with interests in various aspects of corporate finance, corporate governance and interactions between financial markets and real activity.