The Financialization of Corporate Governance

Cambridge Handbook on Investor Protection, 2020

Brooklyn Law School, Legal Studies Paper No. 653

17 Pages Posted: 18 Dec 2020

Date Written: December 14, 2020

Abstract

Hedge funds and other activist investors, in league with pension funds and other institutions have caused a financialization of corporate governance. Stock-market prices rather than long-term earnings are the focus of corporate managers and directors. This essay discusses shareholder primacy and stakeholder theories and suggests that neither adequately deals with the detriment to investors and the public that executive compensation based on equity prices has wrought. Possible remedies recommended by others are discussed as well as some of the author’s ideas for reform.

Keywords: corporation law, Securities Law, Executive Compensation,Buy-Backs,Fiduciary Duties, Corporate Purpose, Shareholder Primacy, Stakeholder Governance

Suggested Citation

Karmel, Roberta S., The Financialization of Corporate Governance (December 14, 2020). Cambridge Handbook on Investor Protection, 2020, Brooklyn Law School, Legal Studies Paper No. 653, Available at SSRN: https://ssrn.com/abstract=3748574

Roberta S. Karmel (Contact Author)

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States
(718) 780-7946 (Phone)
(718) 780-0375 (Fax)

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