The theory also requires that the aggregate of investors are fools.
She's a lawyer and professor in precisely this area. You could read the wikipedia article, and try to confirm your bias. Or, you can read the book, written by an expert, and broaden your perspective.
The authors point is that a company is not obliged to pay all its profits in devisends. Without any proper explaination, the author draws the conclusion that shareholders aren’t entitled to any of the companies profits. This completely ignores to irrefutable truths
1) Not paying dividends does not automatically mean not maximising shareholders benefit. There’s unlimited ways a company can invest their profits in things other than dividends that will still benefit shareholders.
2) The shareholders control the company’s decision making. They elect the board, and the board controls the entire company.
The authors entire argument relies on pointless semantics and a highly selective view of reality. The same selective view you’ve displayed by acting as if profits and dividends are the same thing, and ignoring corporate governance structures.
Well, yes and no. The best or most powerful negotiator controls the company, and everybody who has an interest in the business (investors, creditors, employees, customers, suppliers, the public) can seek the power to manipulate the company on behalf of their own self interest. Shareholders can certainly partake in that process as well. But there's no law that guarantees that their interests have primacy over those other groups.
And that's just in the nominially shareholder-democratic sphere of things that are actually brought before shareholders. Most things simply aren't, and furthermore, in public companies, management essentially CAN'T tell shareholders more than is required by the SEC, because that means making the information public, for their competitors to see and plan around.
In short, shareholder democracy "sounds good, doesn't work." Management has total, dictatorial power, except in the case of major institutional investors like mutual fund managers or investment banks, who often as a matter of policy always support management. Even when they don't, they're so far removed from the people whose money it is that they're using to exercise their power that they may as well be classed with the manager class. Rarely, very wealthy individuals can exercise substations control as investors. More often, they are management as well (e.g. Zuckerberg's control of Facebook is as a manager, not as a shareholder.)