Realigning Corporate Governance: Shareholder Activism by Labor Unions
Stewart J. Schwab
Cornell Law School
Randall S. Thomas
Vanderbilt University - Law School; European Corporate Governance Institute (ECGI)
April 1, 1993
Michigan Law Review, Vol. 96, No. 4, p. 1018, February 1998
Vanderbilt Public Law Research Paper
Vanderbilt Law and Economics Research Paper
Labor unions are aggressively using their ownership power to push corporate-governance reforms. So far, much of their activity is tactical. Lasting changes in corporate governance can occur if unions develop a more strategic model of their role in corporate governance. A stretegic model would require unions to concentrate on areas where their interests coincide with other shareholders and where they can demonstrte that their actions will increase firm value. This requires that labor unions adopt a platform of maximizing long-term growth for shareholders and other stakeholders, as well as for themselves. In particular, unions must convince other shareholders that they are acting in areas where they have an informational advantage about the corporation's and management's operations. If labor can demonstrate to other sharholders that it is using its monitoring advantagaes to take actions to increase firm value by policing management shirking and reducing the agency costs of equity, then other shareholders will be more willing to follow its lead in future voting initiatives. This opens up the possibility that labor union shareholders could reinvigorate some currently ineffectual corporate-governance systems. These might include the policing of securities fraud and other types of corporate misconduct through the use of existing litigation techniques.
Number of Pages in PDF File: 78
Keywords: Labor Unions, corporate, governance, shareholder,working papers series
Date posted: December 22, 2010 ; Last revised: January 26, 2011
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo1 in 0.344 seconds