Shareholder model is more practical because it demonstrations a straightforward connection between employer and employee. The model reduces moral hazard by precisely stating the shareholder and manager’s responsibility and their constraints. The shareholder model is established by a contract where managers entered voluntarily to perform a fiduciary duty for the shareholders. The shareholders are assumed to be driven by pure self-interest, where their primary desire is to maximize profit. Therefore, manager has the obligation to maximize shareholder’s equity. It is their only goal in the model and their performances are evaluated strictly on how much income they can make out of the investment shareholders put in. Managers do not need to consider other stakeholders, or worry about whether if their management is ethnical. This simplicity makes the model easy to practice in real life. However, this is where it becomes problematic to most people. Heath in his paper argues “the fact that shareholders are residual claimants in a standard business corporation means that their interests are not protected by an explicit contract.”3 In other words, by only thinking about self-interest, the shareholder model underestimates the potential moral hazard due to the fact that shareholders might have unethical desires. On the contrary, this concern can be mitigated and largely avoidable because corporation decisions and actions are constraint by the law and public norms. Property law constraints the actions of managers, reduces moral hazard of unethical behaviors such as, mismanaging investment, misusage of resources or bankruptcy. The property law argument, provided by Friedman, states that owners have the right to claim maximize return on investment since they are technically the true owners of a corporation, and managers have no right to use their “property” any other way. As well, shareholder’s decisions are constraint by regulations, where