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Corporate Constituency Statutes and Employee Governance

Brett McDonnell

University of Minnesota Law School

October 15, 2002

Minnesota Public Law Research Paper No. 02-13

The paper compares the effects of corporate constituency statutes versus employee involvement in corporate governance, using a simple model to consider interactions between shareholders, employees, and managers. Both constituency statutes and employee governance tend to lead to a redistribution from shareholders to employees. However, constituency statutes do so at the cost of weakening limits on managerial misbehavior, thereby reducing social welfare. In contrast, employee governance strengthens the limits on managerial misbehavior, and hence is potentially more desirable than constituency statutes.

Number of Pages in PDF File: 40

JEL Classification: G30, G34, K22, L21

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Date posted: November 10, 2002  

Suggested Citation

McDonnell, Brett, Corporate Constituency Statutes and Employee Governance (October 15, 2002). Minnesota Public Law Research Paper No. 02-13. Available at SSRN: http://ssrn.com/abstract=349642 or http://dx.doi.org/10.2139/ssrn.349642

Contact Information

Brett H. McDonnell (Contact Author)
University of Minnesota Law School ( email )
229 19th Avenue South
Minneapolis, MN 55455
United States
612-625-1373 (Phone)
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