Quotation Gelter, Martin. 2008. The Dark Side of Shareholder Influence: The Connection between Managerial Autonomy and Stakeholder Orientation in Comparative Corporate Governance. SJD Colloquium, Harvard Law School, Vereinigte Staaten/USA, 14.4.-14.4.




Comparative corporate governance scholarship is mostly preoccupied with the protection of shareholders against illicit self-dealing by managers and controlling shareholders, and the problem of agency cost. Differences in the role of stakeholders such as employees between different countries are acknowledged in the literature, but usually not explained in functional terms. I propose a new explanation of these differences resting on the amount of shareholder influence on managerial decision-making, i.e. the degree to which managers are forced or incentivized to take shareholder interests into account. Pro-employee laws mitigate holdup problems, i.e. opportunism from which shareholders benefit ex post, but which will deter firm-specific investment in human capital ex ante. Since holdup takes place within what is considered legitimate managerial business judgment and all (both majority and minority) shareholders are its financial beneficiaries, comparative corporate governance must take the degree of managerial autonomy into account, which needs to be distinguished from shareholder protection, i.e. laws protecting (minority) shareholders against self-dealing by managers and controlling shareholders. US scholars are increasingly debating the insulation of the board of directors from shareholders in the United States, and have attempted to explain it in functional terms. Proponents of a stakeholder view of corporate law have argued that the insulation of the board of directors in the United States from shareholders mitigates the risk of holdup of members of nonshareholder constituencies by shareholders, thus encouraging specific investment by these groups, most importantly human capital investment by employees. However, US corporate law is unusual in the large degree of autonomy enjoyed by managers vis-à-vis shareholders. Concentrated ownership, which is typical for Continental Europe, eliminates managerial autonomy and is thus conducive to holdup problems.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Paper presented at an academic conference or symposium
Language English
Title The Dark Side of Shareholder Influence: The Connection between Managerial Autonomy and Stakeholder Orientation in Comparative Corporate Governance
Event SJD Colloquium
Year 2008
Date 14.4.-14.4.
Country United States/USA
Location Harvard Law School


Shareholder and Stakeholder Orientation in Corporate Covernance and Corporate Law
Gelter, Martin (Former researcher)
Civil Law and Civil Procedure Group V (Civil, Business and Insolvency Law) AB (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
5203 Labour law (Details)
5208 Company law (Details)
5300 Economics (Details)
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