TY  - JOUR
AU  - Faleye,Olubunmi
AU  - Mehrotra,Vikas
AU  - Morck,Randall
TI  - When Labor Has a Voice in Corporate Governance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11254
PY  - 2005
Y2  - April 2005
UR  - http://www.nber.org/papers/w11254
L1  - http://www.nber.org/papers/w11254.pdf
N1  - Author contact info:
Olubunmi Faleye
Northeastern University
E-Mail: o.faleye@neu.edu

Vikas Mehrotra
University of Alberta
School of Business
Edmonton, AB, Canada T6G2R6
E-Mail: vmehrotr@ualberta.ca

Randall Morck
Faculty of Business
University of Alberta
Edmonton, AB  T6G 2R6
CANADA
Tel: 780/492-5683
Fax: 780/492-3325
E-Mail: randall.morck@ualberta.ca
AB  - Equity ownership gives labor both a fractional stake in the firm's residual cash flows and a voice in corporate governance. Relative to other firms, labor-controlled publicly-traded firms deviate more from value maximization, invest less in long-term assets, take fewer risks, grow more slowly, create fewer new jobs, and exhibit lower labor and total factor productivity. We therefore propose that labor uses its corporate governance voice to maximize the combined value of its contractual and residual claims, and that this often pushes corporate policies away from, rather than towards, shareholder value maximization.
ER  -