When labor has a voice in corporate governance

"Equity ownership gives labor both a fractional stake in the firm's residual cash flows and a voice in corporate governance. Relative to other firms, labor-controlled publicly-traded firms deviate more from value maximization, invest less in long-term assets, take fewer risks, grow more sl...

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Bibliographic Details
Main Authors: Faleye, Olubunmi, Mehrotra, Vikas, Morck, Randall
Institution:ETUI-European Trade Union Institute
Format: TEXT
Language:English
Published: Cambridge, MA 2005
National Bureau of Economic Research
Subjects:
Online Access:https://www.labourline.org/KENTIKA-19185139124919033119-When-labor-has-a-voice-in-corp.htm
Description
Summary:"Equity ownership gives labor both a fractional stake in the firm's residual cash flows and a voice in corporate governance. Relative to other firms, labor-controlled publicly-traded firms deviate more from value maximization, invest less in long-term assets, take fewer risks, grow more slowly, create fewer new jobs, and exhibit lower labor and total factor productivity. We therefore propose that labor uses its corporate governance voice to maximize the combined value of its contractual and residual claims, and that this often pushes corporate policies away from, rather than towards, shareholder value maximization."
Physical Description:44 p.
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