Abstract

Good corporate governance requires that managers promote shareholder interests but it cannot be assumed they will act in this manner. Though this is an observation most managers would acknowledge, many argue they should be free of external regulatory intervention because regulations designed to protect shareholders are necessarily a form of paternalism that take from shareholders decisions that are rightly theirs to make. We question this perspective by showing that regulations founded on paternalist principles are compatible with a liberal economy and social relations. We identify when a paternal approach to decision making is justified and add substance to our argument by responding to claims that the Principles of Good Governance1 promulgated by the Australian Stock Exchange (ASX) are an unacceptable infringement on managers’ right to govern their enterprises because they are supposedly paternalist. We reject this argument and suggest that while the current ASX principles are not paternalistic there is a case for ensuring shareholder protection is informed by paternalist principles.