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This separation created a whole bunch of new challenges and potential conflicts. **Berle and Means** argued that managers, driven by their own interests (like bigger salaries or empire-building), might not always act in the best interests of the shareholders. They might prioritize short-term profits over long-term sustainability, or even engage in self-dealing at the expense of the owners. Think about it: if you're a manager, and you're not directly invested in the company's long-term success, your incentives might be different than those of the *actual* owners. This disconnect, they believed, could lead to inefficiencies, mismanagement, and a misallocation of resources across the economy. Furthermore, they pointed out that the dispersed ownership of large corporations made it difficult for shareholders to effectively monitor and control the actions of management. Individual shareholders had little power, and collective action was often hampered by the costs and challenges of coordinating a large and diverse group of owners. This, in turn, opened the door to managerial power and potential abuses. The power dynamic changed drastically, and this power dynamic forms the basis of many contemporary debates about corporate governance and regulation. This is why their work is still so influential!
