116 research outputs found
Corporate Governance, Corporate and Employment Law, and the Costs of Expropriation
We set up a model to study how ownership structure, corporate law and employment law interact to set the incentives that influence the decision by the large shareholder or manager effectively controlling the firm to divert resources from minority shareholders and employees. We suggest that agency problems between the controller and other investors and holdup problems between shareholders and employees are connected if the controller bears private costs of âexpropriatingâ these groups. Corporate law and employment law may therefore somethimes be substitutes; employees may benefit from better corporate law intended to protect minority shareholder, and viceversa. Our model has implications for the domestic and comparative study of corporate governance structure and addresses, among other things, the question whether large shareholders are better able to âbondâ with employees than dispersed ones, or whether the separation of ownership facilitates longterm relationships with labor.
COVID-19 and Comparative Corporate Governance
With the pandemic caused by the novel coronavirus SARS-CoV-2 raging around the world, many countriesâ economies are at a crucial juncture. The COVID-19 external shock to the economy has the potential to affect corporate governance profoundly. This Article explores its possible impact on comparative corporate governance. For an economy to operate successfully, a society must first find a politically sustainable social equilibrium. In many countries, historical crisesâsuch as the Great Depression and World War IIâhave resulted in a reconfiguration of corporate governance institutions that set the course for generations. While it is not yet clear whether COVID-19 will have a similar effect, it is possible that it will change patterns of what kind of firms areâfrom an evolutionary per-spectiveâlikely to survive, and which ones are not. We argue that to some extent, it will accelerate ongoing trends, whereas in other areas it put corporations on an entirely new course. We observe three trends, namely the need for resilience, a growth of nationalist policies in corporate law, and an increasing orientation toward âstakeholderâ interests. First, firms will have to become resilient to the crisis and consequently long-term oriented. Corporations that are not operating merely on an armâs length capital market basis but are integrated into a network, generated by core shareholders, state ownership, or bank lending may be more likely to survive. In addition, firms are beginning to interact with their workforce differently in their attempts to maintain what could be called âhealthy hu-man capital.â Second, we are likely to see a resurgence of nationalism in corporate gov-ernance to ensure that foreign ownership and interconnected supply chains do not put na-tional security at risk. Third, the existing critiques of inequality but also climate change awareness will accelerate the trend toward a broadening of corporate purpose toward âstakeholderismâ and public policy issues. As in the past years, institutional investors act-ing as âuniversal ownersâ will play a role in shaping this trend
Company âEmigrationâ and EC Freedom of Establishment: Daily Mail Revisited
Following the ECJâs recent case law on EC freedom of establishment (the Centros, Ăberseering and Inspire Art cases), regulatory competition for corporate law within the European Union takes place at an early stage of the incorporation of new companies. In contrast, as regards the âmoving outâ of companies from the country of incorporation, the ECJ once considered a tax law restriction against the transfer abroad of a companyâs administrative seat as compatible with EC freedom of establishment (the Daily Mail case). For years, this decision has been regarded as applicable to all restrictions imposed by countries of incorporation, even the forced liquidation of the âemigratingâ company. This paper addresses the question whether EC freedom of establishment really allows Member States to place any limit on the âemigrationâ of nationally registered companies. It argues that EC freedom of establishment covers the transfer of the administrative seat as well as the transfer of the registered office and, therefore, that the country of incorporation cannot liquidate âemigratingâ companies. In addition, it addresses the question whether a new Directive is needed to allow the transfer of a com- panyâs registered office and the identity-preserving company law changes. It argues that such a Directive is necessary to avoid legal uncertainty and to protect the interests of employees, creditors and minority shareholders, among others, who could be detrimentally affected by the âemigrationâ of national companies
Risk-shifting Through Issuer Liability and Corporate Monitoring
This article explores how issuer liability re-allocates fraud risk and how risk allocation may reduce the incidence of fraud. In the US, the apparent absence of individual liability of officeholders and insufficient monitoring by insurers under-mine the potential deterrent effect of securities litigation. The underlying reasons why both mechanisms remain ineffective are collective action problems under the prevailing dispersed ownership structure, which eliminates the incentives to moni-tor set by issuer liability. This article suggests that issuer liability could potentially have a stronger deterrent effect when it shifts risk to individuals or entities holding a larger financial stake. Thus, it would enlist large shareholders in monitoring in much of Europe. The same risk-shifting effect also has implications for the debate about the relationship between securities litigation and creditor interests. Credi-torsâ claims should not be given precedence over claims of defrauded investors (e.g., because of the capital maintenance principle), since bearing some of the fraud risk will more strongly incentivise large creditors, such as banks, to monitor the firm in jurisdictions where corporate debt is relatively concentrated
Shaping touristsâ wellbeing through guided slow adventures
Against the backdrop of the United Nationsâ Sustainable Development Goal 3, good health and wellbeing, this paper reports on a study that examined how outdoor guides perceive their role in facilitating the psychological wellbeing of tourists who consume slow adventure experiences. These experiences, such as canoeing, stargazing or foraging, are characterised by a slower passage of time, immersion in the natural world and a sense of belonging to small social groups. Grounded in research on wellbeing from a positive psychology perspective, the study utilised semi-structured, in-depth, interviews with ten outdoor adventure guides in the Scottish Highlands and Islands. Following a hermeneutic interpretive approach to analyse the interview transcripts, the findings revealed how perceptions of time, meaningful moments and a sense of togetherness are choreographed by slow adventure guides to shape touristsâ psychological wellbeing through immersive guided experiences, ultimately helping tourists to re-establish a much-yearned-for connection with nature. The study adds to tourism, wellbeing and sustainability literature by providing new perspectives on psychological wellbeing through guided slow adventures. In particular the findings contribute to positive tourism, or tourism and positive psychology field of research, by revealing how mindful and eudaimonic visitor experiences are organised by adventure tour guides in natural settings
Justice and Corporate Governance: New Insights from Rawlsian Social Contract and Senâs Capabilities Approach
By considering what we identify as a problem inherent in the ânature of the firmââthe risk of abuse of authorityâwe propound the conception of a social contract theory of the firm which is truly Rawlsian in its inspiration. Hence, we link the social contract theory of the firm (justice at firmâs level) with the general theory of justice (justice at societyâs level). Through this path, we enter the debate about whether firms can be part of Rawlsian theory of justice showing that corporate governance principles enter the âbasic structure.â Finally, we concur with Senâs aim to broaden the realm of social justice beyond what he calls the âtranscendental institutional perfectionismâ of Rawlsâ theory. We maintain the contractarian approach to justice but introduce Senâs capability concept as an element of the constitutional and post-constitutional contract model of institutions with special reference to corporate governance. Accordingly, rights over primary goods and capabilities are (constitutionally) granted by the basic institutions of society, but many capabilities have to be turned into the functionings of many stakeholders through the operation of firms understood as post-constitutional institutional domains. The constitutional contract on the distribution of primary goods and capabilities should then shape the principles of corporate governance so that at post-constitutional level anyone may achieve her/his functionings in the corporate domain by exercising such capabilities. In the absence of such a condition, post-constitutional contracts would distort the process that descends from constitutional rights and capabilities toward social outcomes
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