Common Ownership and the Corporate Governance Channel for Employer Power in Labor Markets

2020 ◽  
Author(s):  
Marshall Steinbaum
Keyword(s):  
Corporate Governance ◽  
Labor Markets ◽  
Common Ownership

Common Ownership and the Corporate Governance Channel for Employer Power in Labor Markets

2021 ◽  
Vol 66 (1) ◽  
pp. 123-139
Author(s):  
Marshall Steinbaum
Keyword(s):  
Corporate Governance ◽  
Labor Market ◽  
Labor Markets ◽  
Market Power ◽  
Profit Maximization ◽  
Balance Of Power ◽  
Consumer Welfare ◽  
Firm Level ◽  
Common Ownership

This article combines two relatively new subjects of antitrust scholarly interest: labor market power and corporate governance. In so doing, it speaks to a number of recent debates that have grown up both inside the scholarly antitrust literature and adjacent to it. First, this article interprets the shift in the balance of power within corporations favoring shareholders at the expense of workers, both in economic-theoretical and historical terms. Second, it lays out the role of shareholders and the common ownership channel as a vector for anticompetitive conduct arising between firms, not just within firms, thanks to profit maximization at the portfolio level rather than the firm level. Third, it evaluates the claim that employer market power has increased, relative to other current explanations for labor market trends. Fourth, it ties rising employer power in labor markets to the increasing significance of common ownership. And finally, it contends that antitrust is a suitable policy remedy to the dual problems of anticompetitive common ownership and increased employer power, provided it abandons the consumer welfare standard and instead elevates worker welfare to an equivalent juridical status.

scholarly journals Policy Implications of the Common Ownership Debate

2021 ◽  
Vol 66 (1) ◽  
pp. 140-149
Author(s):  
Eric A. Posner
Keyword(s):  
Corporate Governance ◽  
Market Structure ◽  
Capital Market ◽  
Policy Implications ◽  
Antitrust Enforcement ◽  
Policy Responses ◽  
Common Ownership ◽  
The Common

Empirical findings that common ownership is associated with anticompetitive outcomes including higher prices raise questions about possible policy responses. This comment evaluates the major proposals, including antitrust enforcement against common owners, regulation of corporate governance, regulation of compensation of management of portfolio firms, regulation of capital market structure, and greater antitrust enforcement against portfolio firms.

Institutional Investor Voting Behaviour

2021 ◽  
pp. 227-262
Author(s):  
Luca Enriques ◽  
Alessandro Romano
Keyword(s):  
Corporate Governance ◽  
Institutional Investors ◽  
Institutional Investor ◽  
Geographical Proximity ◽  
Voting Behaviour ◽  
Current Policy ◽  
Policy Issues ◽  
Common Ownership ◽  
Asset Managers ◽  
Shed Light

This chapter shows how network theory can improve our understanding of institutional investors’ voting behaviour and, more generally, their role in corporate governance. The standard idea is that institutional investors compete against each other on relative performance and hence might not cast informed votes, due to rational apathy and rational reticence. In other words, institutional investors have incentives to free-ride instead of ‘cooperating’ and casting informed votes. We show that connections of various kinds among institutional investors, whether from formal networks, geographical proximity, or common ownership, and among institutional investors and other agents, such as proxy advisors, contribute to shaping institutional investors’ incentives to vote ‘actively’. They also create intricate competition dynamics: competition takes place not only among institutional investors (and their asset managers) but also at the level of their employees and among ‘cliques’ of institutional investors. Employees, who strive for better jobs, are motivated to obtain more information on portfolio companies than may be strictly justified from their employer institution’s perspective, and to circulate it within their network. Cliques of institutional investors compete against each other. Because there are good reasons to believe that cliques of cooperators outperform cliques of non-cooperators, the network-level competition might increase the incentives of institutional investors to collect information. These dynamics can enhance institutional investors’ engagement in portfolio companies and also shed light on some current policy issues such as the antitrust effects of common ownership and mandatory disclosures of institutional investors’ voting.

scholarly journals The Multifaceted Concept of Transparency

2014 ◽  
pp. 2-30 ◽  
Author(s):  
Jens Forssbæck ◽  
Lars Oxelheim
Keyword(s):  
Economic Growth ◽  
Resource Allocation ◽  
Corporate Governance ◽  
Conceptual Framework ◽  
Labor Markets ◽  
Cost Of Capital ◽  
Investment Decisions ◽  
Maximum Efficiency ◽  
Corporate Sector ◽  
Potential Growth

The Oxford Handbook of Economic and Institutional Transparency studies transparency in three main economic areas: policy analysis, the corporate sector, and the institutional and regulatory structures surrounding the markets. Chapters present a conceptual framework to unify prominent notions of transparency in the literature and their link through an economy's capital formation process to investment for economic growth. The conceptual framework builds from basic notions of evaluating cost of capital and exchange efficiency to launch discussion on the costs of and gains from transparency. It also introduces the link between maximum efficiency and optimal transparency. The Handbook addresses transparency as a condition for economic efficiency in general, with an emphasis on the significance of transparency for finance and investment decisions. The basic underlying hypothesis is that increased transparency increases the efficiency of resource allocation and raises the level of potential growth. Although there are various studies of the causes and effects of structural economic differences in specific areas such as corporate governance and labor markets, this reference work will be among the first to present transparency as an overarching theme.

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