When Labor Has a Voice in Corporate Governance / Olubunmi Faleye, Vikas Mehrotra, Randall Morck.

Format:

Book

Author/Creator:

Faleye, Olubunmi.

Contributor:

National Bureau of Economic Research.

Mehrotra, Vikas.

Morck, Randall.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11254.

NBER working paper series no. w11254

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2005.

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.

Notes:

Print version record

April 2005.