{"id":1799,"date":"2009-01-01T09:03:20","date_gmt":"2009-01-01T13:03:20","guid":{"rendered":"http:\/\/www.journals.law.harvard.edu\/ilj\/site\/?p=1799"},"modified":"2010-09-17T12:01:35","modified_gmt":"2010-09-17T16:01:35","slug":"issue_50-1_gelter","status":"publish","type":"post","link":"https:\/\/journals.law.harvard.edu\/ilj\/2009\/01\/issue_50-1_gelter\/","title":{"rendered":"The Dark Side of Shareholder Influence"},"content":{"rendered":"<p><span style=\"text-decoration: underline;\">Abstract<\/span><\/p>\n<p><em>This  article proposes a new, functional explanation of the different roles  of non-shareholder groups (particularly labor) in different corporate  governance systems. The argument depends on the analysis of a factor  that has so far received relatively little attention in corporate  governance research: the level of shareholder influence on managerial  decision making. Pro-employee laws mitigate holdup problems\u2014opportunism  from which shareholders benefit ex post, but which will deter  firm-specific investment in human capital ex ante. Since holdup takes  place within what is considered legitimate managerial business judgment  and all shareholders (both majority and minority) are its financial  beneficiaries, the degree of managerial autonomy from shareholders is an  important factor. In the United States, proponents of a stakeholder  view of corporate law have argued that the insulation that U.S. boards  of directors have from shareholders mitigates the risk of holdup of  nonshareholder constituencies by shareholders, thus encouraging  firm-specific investment such as investment in human capital. However,  the large degree of autonomy of U.S. boards is unusual. This autonomy is  eliminated, for example, by concentrated ownership, which prevails in  Continental Europe. This article therefore suggests that, given their  costs, laws aiming at the protection of stakeholders\u2014such as  codetermination and restrictive employment laws\u2014may be normatively more  desirable in the presence of stronger shareholder influence,  particularly under concentrated ownership. The theory is corroborated by  the observation that such laws tend to be more strongly developed in  corporate governance systems with stronger shareholder influence. The  United Kingdom, which has both stronger shareholder influence and  stronger employment law than the United States, is classified as an  intermediate case.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>This article proposes a new, functional explanation of the different roles of non-shareholder groups (particularly labor) in different corporate governance systems. The argument depends on the analysis of a factor that has so far received relatively little attention in corporate governance research: the level of shareholder influence on managerial decision making.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"_FSMCFIC_featured_image_caption":"","_FSMCFIC_featured_image_nocaption":"","_FSMCFIC_featured_image_hide":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[123],"tags":[],"class_list":["post-1799","post","type-post","status-publish","format-standard","hentry","category-print-archives"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/peZu3S-t1","jetpack_likes_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/posts\/1799","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/comments?post=1799"}],"version-history":[{"count":0,"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/posts\/1799\/revisions"}],"wp:attachment":[{"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/media?parent=1799"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/categories?post=1799"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/tags?post=1799"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}