They’re value-maximizers who will instantly comply.

In the first alternative, the paper discussed the set of sections dealing with accumulated earnings. 217 One of the advantages of tax law is attributable to its importance in the decision-making process and in that respect, it is an efficient regulatory mechanism. 218 Tax considerations are fundamental to individuals and entities in making business decisions, and they generally react rather promptly to tax reforms. 219 Tax law is a fundamental consideration taken by taxpayers -- especially business persons -- before and in the course of their activities. 220 Thus, it is plausible to assume that the additional tax imposed on corporations for their accumulation shall induce entities to distribute their earnings. 221 Namely, corporations are induced to distribute dividends to all shareholders; otherwise, they are exposed to additional tax. 222 The accumulated earnings provision taxes corporations on undistributed earnings. 223 This can serve as a tool to minimize the conflict between minority and majority shareholders. Since agents are value maximizers and are part of their corporation, they are induced to reduce the corporation's tax burden. And since eventually corporate tax is borne by individuals (though, not necessarily shareholders), in a highly concentrated corporation a tax imposed on corporations has a larger effect on shareholders than in a corporation with dispersed ownership. As long as the majority shareholders' holdings in the corporation are substantial, they are motivated to escape this extra taxation levied on their corporation. 224 Thus, tax law and corporate law go hand in hand since agents have incentives to reduce their tax burden.