Harnessing the Collective Power of Retail Investors

Abstract

This book chapter, forthcoming in A Research Agenda for Corporate Law (Christopher M. Bruner & Marc Moore, eds.) (Edward Elgar Publishing), suggests a path forward to harness the collective power of new generations of retail investors. Since 2020, new retail investors have been flooding the securities markets, opening a record-breaking number of new brokerage accounts. The overwhelming majority of these new retail investors are Millennials and GenZ’ers, who are becoming a powerful force due to their generational characteristics and affinities. These new generations of retail investors can shift paradigms in corporate governance and in the relation between business corporations and society. The chapter sheds light on the benefits that harnessing the collective power of retail investors can bring about, with an emphasis on easing access to corporate governance for all shareholders, increasing diversity in corporate governance, bridging the gap between business corporations and society, and nurturing the relation between consumer-facing corporations and new generations of investor-consumers, or “investomers.” With these goals, this chapter also discusses what corporate governance infrastructure would enhance the engagement of retail investors and allow society and corporations to harness the benefits of the collective power of retail investors.

Keywords: corporate governance, investing, wireless investors, Millennials, GenZ, society, corporate purpose, investomers, stakeholders, collective power

JEL Classification: K2, K20, K22