The 2017 revised Shareholder Rights Directive gives shareholders a say on executive pay and requires institutional investors to improve shareholder engagement. The directive is thus designed to provide a counterweight to the increasingly dominant ‘shareholder’ model of corporate governance which has put the interests of firms’ shareholders ahead of other stakeholders, including their workers. Drawing on the experience of the UK, Europe’s leading exponent of the shareholder model whose experience heavily influenced the Commission’s thinking, this brief analyses the workings of the directive, discusses its implications for worker’s rights and suggests how trade unions should respond. A frequent criticism of institutional investors, such as mutual and pension funds, is their passivity in influencing the companies they invest in despite the power of exit they hold over them. This has been blamed for short-termism, undermining the trust of workers and fueling excessive executive pay. The directive tries to address these problems by increasing transparency and engagement, and requiring investors to show how their portfolios conform to their long-term investment strategies. Although the directive sets no cap on executive pay it provides shareholders with more control over company policies that include pay. The brief critically examines the effectiveness of these policies, arguing that these do not go far enough and may even be unworkable. The advice for trade unions is to continue pushing on issues such as boardroom pay, particularly the notion that it should be set according to the firm’s share price.
{"title":"The Revised Shareholder Rights Directive 2017: Policy Implications for Workers","authors":"Andrew Johnston, P. Morrow","doi":"10.2139/ssrn.3179973","DOIUrl":"https://doi.org/10.2139/ssrn.3179973","url":null,"abstract":"The 2017 revised Shareholder Rights Directive gives shareholders a say on executive pay and requires institutional investors to improve shareholder engagement. The directive is thus designed to provide a counterweight to the increasingly dominant ‘shareholder’ model of corporate governance which has put the interests of firms’ shareholders ahead of other stakeholders, including their workers. Drawing on the experience of the UK, Europe’s leading exponent of the shareholder model whose experience heavily influenced the Commission’s thinking, this brief analyses the workings of the directive, discusses its implications for worker’s rights and suggests how trade unions should respond. A frequent criticism of institutional investors, such as mutual and pension funds, is their passivity in influencing the companies they invest in despite the power of exit they hold over them. This has been blamed for short-termism, undermining the trust of workers and fueling excessive executive pay. The directive tries to address these problems by increasing transparency and engagement, and requiring investors to show how their portfolios conform to their long-term investment strategies. Although the directive sets no cap on executive pay it provides shareholders with more control over company policies that include pay. The brief critically examines the effectiveness of these policies, arguing that these do not go far enough and may even be unworkable. The advice for trade unions is to continue pushing on issues such as boardroom pay, particularly the notion that it should be set according to the firm’s share price.","PeriodicalId":300782,"journal":{"name":"CGN: Employee Involvement in Corporate Governance (Topic)","volume":"57 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-04-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128153910","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Several countries legally mandate representation of workers on boards of directors. The evidence on the shareholder wealth effects of such a corporate governance design is mixed. I examine abnormal announcement returns around major milestones leading to the passing of the German Codetermination Act in 1976. I find that news about the act causes an average decline in the equity value of firms that are certain to have been affected by the new law of up to 1.5% relative to the control firms. Firms close to the regulatory threshold of 2,000 employees remain unaffected implying an expectation of avoiding compliance.
{"title":"Mandatory Worker Representation on the Board and Its Effect on Shareholder Wealth","authors":"Stefan Petry","doi":"10.2139/ssrn.2421061","DOIUrl":"https://doi.org/10.2139/ssrn.2421061","url":null,"abstract":"Several countries legally mandate representation of workers on boards of directors. The evidence on the shareholder wealth effects of such a corporate governance design is mixed. I examine abnormal announcement returns around major milestones leading to the passing of the German Codetermination Act in 1976. I find that news about the act causes an average decline in the equity value of firms that are certain to have been affected by the new law of up to 1.5% relative to the control firms. Firms close to the regulatory threshold of 2,000 employees remain unaffected implying an expectation of avoiding compliance.","PeriodicalId":300782,"journal":{"name":"CGN: Employee Involvement in Corporate Governance (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-04-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126385381","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper utilizes the dynastic cycle framework proposed in (K. Saeed & Pavlov, 2008) to explain the role of dissent in universities. By combining the dissent expression framework (Kassing, 2011) and the dynastic cycle structure, we construct a generic model for dissent in organizations. The work is rooted in the literature of organizational communication, research and development, and higher education management. Using system dynamics methodology, we illustrate the dynamic interaction of composition, climate, and performance to simulate and explain how organizations evolve with regard to dissent. This model provides a platform for experimentation with different policy scenarios focusing on growth and productivity. The research suggests that as universities attempt to improve their performance through growth, despite initial short-term performance improvements, they are likely to devolve into low performance institutions with degraded management responsiveness and organizational productivity. Regardless of having high dissent tolerance, they could become dominated by high control and silence climates. When organizations invest in cultivating a dissent aware climate, and strive to improve their dissent processing capability, we suggest that the university and its members will be more productive and engaged.
{"title":"Dynastic Cycle: A Resource Allocation Theme for Addressing Dissent in Universities","authors":"R. Zaini, K. Saeed, M. Elmes, O. Pavlov","doi":"10.2139/ssrn.2465025","DOIUrl":"https://doi.org/10.2139/ssrn.2465025","url":null,"abstract":"This paper utilizes the dynastic cycle framework proposed in (K. Saeed & Pavlov, 2008) to explain the role of dissent in universities. By combining the dissent expression framework (Kassing, 2011) and the dynastic cycle structure, we construct a generic model for dissent in organizations. The work is rooted in the literature of organizational communication, research and development, and higher education management. Using system dynamics methodology, we illustrate the dynamic interaction of composition, climate, and performance to simulate and explain how organizations evolve with regard to dissent. This model provides a platform for experimentation with different policy scenarios focusing on growth and productivity. The research suggests that as universities attempt to improve their performance through growth, despite initial short-term performance improvements, they are likely to devolve into low performance institutions with degraded management responsiveness and organizational productivity. Regardless of having high dissent tolerance, they could become dominated by high control and silence climates. When organizations invest in cultivating a dissent aware climate, and strive to improve their dissent processing capability, we suggest that the university and its members will be more productive and engaged.","PeriodicalId":300782,"journal":{"name":"CGN: Employee Involvement in Corporate Governance (Topic)","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-03-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117153490","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper I hypothesize and find that both shareholder rights and debt have significant effects on firm-employee relationships. I find that, consistent with ineffective resource management, firms with weaker governance have more employees per assets and are more likely to hire due to sales growth. I use changes in investment in capital and R&D to rule out that this result is due entirely to the propensity of poorly governed firms to overinvest. Furthermore, this study shows that while weak shareholder rights are associated with lower labor productivity, higher debt is also associated with lower labor productivity. Finally, I show that higher labor productivity is associated with higher wages, and that firms with weak shareholder rights pay more for this productivity. These results are consistent with the theory that debt discipline and shareholder monitoring, although both forms of corporate governance, are subject to the differing incentives of debt and equity investors.
{"title":"Shareholder Rights and Employment","authors":"C. Hall","doi":"10.2139/ssrn.1909598","DOIUrl":"https://doi.org/10.2139/ssrn.1909598","url":null,"abstract":"In this paper I hypothesize and find that both shareholder rights and debt have significant effects on firm-employee relationships. I find that, consistent with ineffective resource management, firms with weaker governance have more employees per assets and are more likely to hire due to sales growth. I use changes in investment in capital and R&D to rule out that this result is due entirely to the propensity of poorly governed firms to overinvest. Furthermore, this study shows that while weak shareholder rights are associated with lower labor productivity, higher debt is also associated with lower labor productivity. Finally, I show that higher labor productivity is associated with higher wages, and that firms with weak shareholder rights pay more for this productivity. These results are consistent with the theory that debt discipline and shareholder monitoring, although both forms of corporate governance, are subject to the differing incentives of debt and equity investors.","PeriodicalId":300782,"journal":{"name":"CGN: Employee Involvement in Corporate Governance (Topic)","volume":"63 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-08-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114833849","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
I study company characteristics that are associated with shareholder value changes in the new legal form: Societas Europaea (SE). In an event study of 47 companies that announce to become SEs I find that companies that change their board structure from two-tier to one tier have 3.7 percentage points lower returns than companies that do not change their board structure. Companies in the gambling or renewable energy industry have 2.8 percentage points higher returns than other companies. Last, companies already underperform their industry peers before they become SEs. The results are consistent with the hypothesis that adoption of the SE can be used to weaken the board's monitoring rule. Moreover, the SE's possibility of relocation within the European Union is beneficial to companies that operate in industries that depend on state subsidies, such as the renewable energy industry, or need special permits to operate (the online gambling industry).
{"title":"Value Creation and Value Destruction in the Societas Europaea: Evidence from the New Legal Form","authors":"F. Lamp","doi":"10.2139/ssrn.1728162","DOIUrl":"https://doi.org/10.2139/ssrn.1728162","url":null,"abstract":"I study company characteristics that are associated with shareholder value changes in the new legal form: Societas Europaea (SE). In an event study of 47 companies that announce to become SEs I find that companies that change their board structure from two-tier to one tier have 3.7 percentage points lower returns than companies that do not change their board structure. Companies in the gambling or renewable energy industry have 2.8 percentage points higher returns than other companies. Last, companies already underperform their industry peers before they become SEs. The results are consistent with the hypothesis that adoption of the SE can be used to weaken the board's monitoring rule. Moreover, the SE's possibility of relocation within the European Union is beneficial to companies that operate in industries that depend on state subsidies, such as the renewable energy industry, or need special permits to operate (the online gambling industry).","PeriodicalId":300782,"journal":{"name":"CGN: Employee Involvement in Corporate Governance (Topic)","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-04-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116466472","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the impact of labor union shareholder activism through the submission of shareholder proposals during 1988-2002. We examine the effect of labor union sponsored shareholder proposals on announcement period returns, on the corporate governance environment of the firm including shareholder rights, board composition, and CEO compensation, and on long run shareholder wealth. We find that the efficacy of activism is related to union presence at targeted firms and shareholder support for proposals. Our findings, hitherto not reported elsewhere, contribute to the shareholder activism literature by implying that labor unions may be unique in their ability to spur such changes relative to other shareholder proponents.
{"title":"Labor Unions as Shareholder Activists: Champions or Detractors?","authors":"Andrew K. Prevost, R. Rao, Melissa A. Williams","doi":"10.2139/ssrn.1119328","DOIUrl":"https://doi.org/10.2139/ssrn.1119328","url":null,"abstract":"This paper examines the impact of labor union shareholder activism through the submission of shareholder proposals during 1988-2002. We examine the effect of labor union sponsored shareholder proposals on announcement period returns, on the corporate governance environment of the firm including shareholder rights, board composition, and CEO compensation, and on long run shareholder wealth. We find that the efficacy of activism is related to union presence at targeted firms and shareholder support for proposals. Our findings, hitherto not reported elsewhere, contribute to the shareholder activism literature by implying that labor unions may be unique in their ability to spur such changes relative to other shareholder proponents.","PeriodicalId":300782,"journal":{"name":"CGN: Employee Involvement in Corporate Governance (Topic)","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-02-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128135114","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：