The chapter investigates the impact of employee participation on the board of directors or supervisory board (particularly codetermination) on corporate social responsibility (CSR). Conceptually, it is important to distinguish between ?internal? and ?external? CSR.
Internal CSR relates to practices of the firm regarding groups with which it is in a long-term contractual relationship such as employees. Employee participation systems serve to protect employees from shareholder opportunism and shift the balance in the distribution of corporate rents in favor of employees, which is why they clearly have an impact on internal CSR. The situation is much less clear for external CSR, which is concerned with effects of corporate activities that are externalities, for example pollution. I argue that there may sometimes be a tradeoff between internal and external CSR: If a firm is more profitable because it scores badly in terms of external CSR (e.g. because it habitually pollutes), employees may benefit similarly as shareholders. In fact, the interests of shareholders and employees may be largely aligned in this respect, with both either benefiting or being harmed concurrently.
Convergence in corporate governance has been debated for more than 20 years. This paper seeks to explain convergence – and the lack thereof – in accounting laws and standards, within the context of this debate. One could argue about whether...Read more
During the revelation of the Weinstein scandal and the emergence of the #MeToo movement, firms with a culture of ethical behavior toward women, proxied by having women among their five highest paid executives, earned excess returns of close to 1....Read more
The idea that a corporation’s employees should be allowed to elect some of the corporation’s board members, a system known as codetermination, has moved to the forefront of U.S. corporate law policy. Elizabeth Warren’s Accountable Capitalism Act...Read more
This study investigates whether and how firms’ stakeholder orientation affects their inventory efficiency as well as financial performance. Using U.S. state legislatures’ staggered adoption of constituency statutes over a 24-year period (1984–...Read more