Corporate Governance and Income Inequality: The Role of the Monitoring Board

Abstract

Does corporate governance play a role in income inequality? If so, how? This paper pursues this inquiry, beginning with an examination of the causes of significant income inequality throughout twentieth and early twenty-first century American history. The parallel developments of financial practices and board structures over these periods reveal the relatively contemporaneous rises of shareholder valuism and the modern monitoring board, with the latter providing institutional structure and norm propagation for the former, thus serving as a corporate governance channel through which income inequality is perpetuated. History further reveals the monitoring board to be an institutional component of finance capitalism, and the so-called managerial board that dominated during a period of relative income equality to be an institutional component of industrial capitalism.