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Abstract:
Shareholders can gain effective control over their firm's management by voting to choose an outside agency to nominate director candidates. This would give the board and management a greater incentive to serve the owners' interests, resulting in higher productivity of capital, more realistic levels of executive pay, less short-termism, and a moderation of the corporate bloat that tends to necessitate drastic cuts. Such a system would further improve corporate governance in western countries, and provide a much needed "quick fix" for governance problems in Asia.

Abstract:
Shareholders can gain effective control over their firm's management by voting to choose an outside agency to nominate director candidates. This would give the board and management a greater incentive to serve the owners' interests, resulting in higher productivity of capital, more realistic levels of executive pay, less short-termism, and a moderation of the corporate bloat that tends to necessitate drastic cuts. Such a system would further improve corporate governance in western countries, and provide a much needed "quick fix" for governance problems in Asia.

Abstract:
Using the internet for shareholder proxy voting will not just save money. It will give shareholders unprecedented influence over the policies of large corporations, by making "corporate monitoring" possible. Rational voter apathy will be counteracted by the internet's ability to make information exchange cheap and easy. Likely benefits include higher profits, support for social goals, and more realistic levels of CEO pay. Compared to other countries, America has more stock held by individuals who use the internet, so America will lead this trend.

Abstract:
A dramatic rise in shareholder power and improvements in corporate governance can be achieved in the next few years by expanding the role of proxy advisory firms. This will require changing the way such firms are paid. They are now paid directly by investors who buy their advice; but this arrangement suffers from a free-rider problem. Instead, they should be paid by each corporation about which they are advising, in accordance with shareholder vote so as to preclude management influence. Any proxy advisor other than the market leader (ISS) stands to gain tremendously by initiating this new system. It would eliminate the natural monopoly feature of the current system, and spread the cost more equitably across all shareholders. It would also enable proxy advisory firms to market their services to individual investors via the internet.

Abstract:
We can improve our political and economic systems by redesigning our use of informational intermediaries (infomediaries). Examples of infomediaries are political parties, the news media, proxy voting advisory firms and auditors. An infomediary's source of funding influences the information it produces - "follow the money". Political campaign finance reform is one approach to redesigning our infomediary systems. This paper proposes another approach: starting a few companies with a new corporate bylaw structure designed to enhance management accountability to shareowners. Shareowners would vote annually to hire an infomediary (paid with corporate funds) to advise them on proxy voting. If this system proves effective, it can spread to existing corporations and then to the political arena.

Abstract:
We can improve our political and economic systems by redesigning our use of informational intermediaries (infomediaries). Examples of infomediaries are political parties, the news media, proxy voting advisory firms, and auditors. An infomediary's source of funding influences the information it produces - "follow the money". Political campaign finance reform is one approach to redesigning our infomediary systems. This paper proposes another approach: starting a few companies with a new corporate bylaw structure designed to enhance management accountability to shareowners. If this system proves effective, it can spread to existing corporations and then to the political arena.

proxy voting, monitoring, corporate governance, corporate democracy

Abstract:
Individual investors are the sleeping giant of corporate governance. The recent implementations of stock voting on the internet and mutual fund vote disclosure in the USA pave the way for three fundamental reforms to awaken that giant: voting by advisor brand reputation; revoking the assignment of voting authority to intermediaries; and strengthening voting advisor brands by paying them with corporate funds directed by shareowners.

We prevent vote-selling in politics by requiring confidential voting. For voting of shares however, the current trend is toward public disclosure of institutional investor votes, in the hope that this will encourage voting in the interests of beneficial owners. Unfortunately, such disclosure facilitates vote-selling, which undermines all shareowners' interests. We can reduce this problem by unbundling portfolio management from proxy voting, making voting intermediaries compete for reputation.

The corporate governance structures currently prevalent in the USA give managers strong incentives to inflate short-term earnings while secretly harming the long-term value of the firm. This hurts shareowners, but lack of information prevents them from defending themselves. Thus the information and decision system improvements proposed here can help shareowners reduce such management short-termism as selecting acquiescent auditors, taking advantage of consumers and employees to temporarily boost earnings at the expense of the firm's reputation, and polluting.

Diversified shareowners have a self-interest in reducing public harm caused by their firms, even if that harm will never be discovered and will never hurt the firm's reputation or stock price. This is because as members of the public, shareowners would suffer some of that harm themselves. Managers are members of the public too, but their relative lack of diversification gives them very little self-interest in balancing public harm against profit. This conflict of interest between managers and shareowners would likewise be reduced by a better monitoring system, so the proposals here can be expected to reduce such negative externalities. Much corporate political influence inflicts negative externalities, so these corporate governance reforms can lead to political reforms also, reducing corruption in both arenas.

Proxy voting, corporate governance, free-rider problem, monitoring, corporate democracy

Abstract:
Media reformers, political campaign finance reformers and corporate governance reformers are all trying to solve the same problem: how to make elected leaders more accountable to voters. Solutions proposed in those different arenas can be hybridized to create a more potent and far-reaching reform mechanism.

Several researchers have independently designed similar systems for reducing the voters' free-rider problem, by letting voters allocate collective funds to pay for improved information. Some designs originated in the field of corporate governance, to help investors in publicly traded corporations vote their shares more effectively. The potential for adapting those systems to help voters in civic politics was also cited. Other designs originated in civic politics, as campaign finance reform: public funds allocated by voters could counterbalance special-interest contributions to political campaigns. Likewise, these ideas have been adapted as a proposal for corporate governance reform. A similar proposal for media reform would allow each taxpayer to direct some government funds to any nonprofit news medium, since existing media seem to provide inadequate public-interest news.

These various designs differ markedly in the degree of voter consensus required for allocating funds. The proposals from civic politics and media reform let each voter allocate her portion of collective funds independently, whereas those from corporate governance require a substantial proportion of voters to approve each allocation. This Essay argues that the latter consensus requirement provides a necessary defense against pervasive incentives to divert collective funds toward narrow interests. It then outlines how to implement a consensus requirement in a civic politics information funding system. Such a mechanism could reduce the dysfunctions of partisan politics, and provide the profit incentive now lacking in public-interest investigative journalism.

A turbocharger is a feedback loop that increases power. A system in which voters allocate funds to buy information that feeds back into voting decisions (where information is power) could thus be called "turbo democracy".

Democracy, media reform, campaign finance reform, corporate governance, free-rider problem

Abstract:
Media reform can help solve the voters' free-rider problem in democracies and corporations. Uninformed voters cannot hold elected leaders accountable. Letting voters allocate collective funds to competing media organizations would avoid the misaligned incentives that limit political effectiveness of existing private- and public-sector media. Integrating related research in corporate governance, campaign finance and media reform, this article argues for funding allocated by consensus vote, rather than by the voucher method more often proposed. Voter funding of media has recently been implemented for the first time, in a university student council election. It is designed to spread to larger democracies and corporations, to improve their policies and social impacts.

Democracy, media reform, campaign finance reform, corporate governance, free-rider problem

Abstract:
Our existing media, both private sector and public sector, have inadequate economic incentives for serving voter interests in our democracies and shareowner interests in our corporations. As a result, we suffer from corruption and inefficient policies. To remedy this, we can create a new hybrid media sector, where organizations compete for funds allocated by voters. This would provide the financial support for media to build their reputations for critiquing politicians, directors and their policies, while remaining loyal to voters' interests. With more trustworthy information and insight, we will be able to use our voting power more effectively.

The blogosphere's recent growth and energy provide an ideal engine for launching this proposal. We can create a website platform for blog (and other media) competitions, one for each voting community in the world. Supported initially by donations, this system should prove valuable enough to voters that they will finance media awards from their community budgets. Early adopters of this proposal are likely to be smaller democracies like student unions and municipalities, followed eventually by coops, credit unions, associations, labor unions, then corporations and regional and national governments.

Tests of this system have begun in Vancouver Canada. This paper describes the economic rationale for this reform, system designs tested so far, the results achieved, and strategies for the next stage of the voter funded media movement. This should make elected leaders (politicians, boards of directors) more accountable to voters and the public interest, and thus help solve the daunting range of global problems that humanity now faces.

democracy, media reform, political reform, corporate governance, free-rider problem

Abstract:
Institutional and individual investors can coordinate their proxy voting to improve corporate governance. A new funding design for professional proxy advisors can increase their quality and competition. These reforms would reduce the need for the public sector to police boards of directors by onerous regulation and expensive lawsuits.

Proxy voting, corporate governance, proxy advisor, individual investor, institutional investor, auditor selection, short-termism, corporate social responsibility

Abstract:
We can improve our political and economic systems by redesigning our use of informational intermediaries (infomediaries). Examples of infomediaries are political parties, the news media, proxy voting advisory firms and auditors. An infomediary's source of funding influences the information it produces - "follow the money". Political campaign finance reform is one approach to redesigning our infomediary systems. This paper proposes another approach: starting a few companies with a new corporate bylaw structure designed to enhance management accountability to shareowners. Shareowners would vote annually to hire an infomediary (paid with corporate funds) to advise them on proxy voting. If this system proves effective, it can spread to existing corporations and then to the political arena.

Abstract:
Using the internet for shareowner proxy voting will not just save money. It will awaken the sleeping giant of corporate governance ? individual investors. It will give shareowners unprecedented influence over the policies of large corporations, by making corporate monitoring possible. Rational voter apathy will be counteracted by the internet's ability to make information exchange cheap and easy. Likely benefits include higher profits, support for social goals, and more realistic levels of CEO pay. Compared to other countries, America has more stock held by individuals who use the internet, so America will lead this trend.

Abstract:
This paper proposes a way for shareholders to monitor a firmis management more effectively. This is accomplished by direct shareholder vote to choose an outside firm to nominate director candidates. Later, if shareholders so decide, such a monitoring firm could perform more director functions, perhaps by holding board seats directly. Potential benefits include higher productivity of capital, more realistic levels of executive pay, less short-termism, and a smoother system of discipline than a cycle of corporate bloat followed by drastic cuts.