ESG, Corporate Governance & Future of the Firm

Reclaiming Corporate Democracy

The following is an excerpt from Sarah C. Haan’s book, “Reclaiming Corporate Democracy.”

Proxy Voting’s Hidden Influence on Corporate Takeovers and Activist Campaigns

Roslyn Layton writes that proxy advisors, which provide voting services for shareholder meetings, can influence how publicly traded firms conduct their business. Two proxy firms–Glass Lewis and Institutional Shareholder Services (ISS)–have 97 percent of the market and have allowed some minority shareholders to exercise outsized influence.

Antitrust Alone Cannot Solve the Big Tech Problem  

Madhavi Singh argues that antitrust alone cannot reign in Big Tech monopolies. Antitrust efforts need to be supplemented by changes to corporate governance that incorporate the interests of all stakeholders and not just those of profit-maximizing shareholders.

Perverse Incentives Have Ruined America’s Railroads

Thomas Malthouse explores the skewed financial models that lead American railroads to underinvest in maintenance and profitable expansion, producing delays, derailments, and environmental catastrophes such as those that occurred in East Palestine, Ohio, in 2023.

Repercussions From Florida’s Stop WOKE Act Show Investors Value DEI

In new research, Hoa Briscoe-Tran finds that some investors pulled funds from Florida-based firms in response to the state’s Stop Woke Act, suggesting that they value diversity, equity, and inclusion (DEI) initiatives.

Exxon’s Suit Against Its Own Shareholders Threatens Valuable Bargaining

Colleen Honigsberg and Robert J. Jackson, Jr. write that Exxon Mobil’s decision to sue its own investors over a shareholder proposal threatens to enervate an admittedly imperfect but ultimately valuable mechanism that provides shareholder feedback to corporate managers and helps both parties negotiate better governance outcomes.

Is Democracy Relevant to the Way We Govern Public Companies?

On May 29, Exxon Mobil held its 2024 corporate election. Before the election, the company sued two investors over their proposal to include a commitment in its proxy statement to accelerate the company’s reduction of greenhouse gas emissions. Sarah Haan argues that the election and the lawsuit shed more light on current upheavals in corporate democracy than they do on the success of the ESG movement.

The Costs of India’s Mandatory Corporate Social Responsibility Rule

In new research, Jitendra Aswani finds that India’s mandatory corporate social responsibility contribution for large firms increased corporate borrowing costs, but transparency and clear communication to investors about these contributions reduced the additional costs.

Minority and Labor Representation Helps Worker Welfare and Productivity

Matthias Breuer, Wei Cai, Anthony Le, and Felix Vetter find that gender minority representation on German works councils helps to improve worker welfare and productivity.

Tesla Directors Took a Big Accounting Bet With No Independent Accounting Advice

Lucian Bebchuk and Robert Jackson argue that the Tesla board’s prediction that restoring Musk’s old pay package would require no new compensation charge to Tesla’s financial statement seems not to have been based on any independent accounting advice. This could carry substantial risks for Tesla stockholders.

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