Labour's paradoxical interests and the evolution of corporate governance

Journal of Law and Society

Volumn 24, Issue 1, 1997, Pages 26-43

  Ghilarducci, Teresa ^a   Hawley, James ^b   Williams, Andrew ^b  

^a UNIVERSITY OF NOTRE DAME   (United States)

^b SAINT MARY'S COLLEGE OF CALIFORNIA   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0031521452     PISSN: 0263323X     EISSN: None     Source Type: Journal    
DOI: 10.1111/1467-6478.00035     Document Type: Article

References (57)

1. See P. Voos and L. Mishel, Unions and Economic Competitiveness (1993).
2. J.K. Galbraith, American Capitalism: The Concept of Countervailing Power (1956).
3. E. Appelbaum and R. Batt, High Performance Work Systems (1993); C. Brown, M. Reich, and D. Stern, 'Becoming a High-Performance Work Organization: The Role of Security, Employee Involvement and Training' (1993) 4 International J. of Human Resource Management 247.
4. E. Appelbaum and R. Batt, High Performance Work Systems (1993); C. Brown, M. Reich, and D. Stern, 'Becoming a High-Performance Work Organization: The Role of Security, Employee Involvement and Training' (1993) 4 International J. of Human Resource Management 247.
5. See I. Lanoff, Department of Labor, Advisory Opinion 8112a, Letter to Robert Georgine, Washington D.C., 15 January 1981; J. Langbein and R. Posner, 'Social Investing and the Law of Trusts' (1980) 79 Michigan Law Rev. 72.
6. See I. Lanoff, Department of Labor, Advisory Opinion 8112a, Letter to Robert Georgine, Washington D.C., 15 January 1981; J. Langbein and R. Posner, 'Social Investing and the Law of Trusts' (1980) 79 Michigan Law Rev. 72.
7. See S. Deakin and G. Slinger, 'Hostile Takeovers, Corporate Law, and the Theory of the Firm', below, 124.
8. Board of Governors, Federal Reserve Board, Flow of Funds Accounts (1992).
9. Employee Benefits Research Institute (EBRI), Quarterly Pension Investment Report (1992) at 55.
10. The five-year period is a standard benchmark for comparison and evaluation of corporate performance in the United States of America.
11. R. Monks and N. Minow, Corporate Governance (1995) at 132.
12. Address to the AFL-CIO sponsored Asset Managers Conference on 2 September, 1993.
13. M. Roe, Strong Managers Weak Owners: The Political Roots of American Corporate Finance (1994) at 233.
14. M. Blair, 'Survey of Empirical Evidence on the Effects of "Relationship Investing" on Corporate Performance', a report prepared for the Subcouncil on Capital Association, Competitiveness Policy Council, Washington, D.C. (22 December 1994), mimeo, at 3.
15. On the meaning of these devices, see Deakin and Slinger, op. cit., n. 5.
16. Blair, op. cit., n. 12, pp. 9-10.
17. J. McConnell and J. Servaes, 'Additional Evidence on Equity Ownership and Corporate Value' (1990) 27 J. of Financial Economics 595.
18. A high Tobin's q can therefore be read as a sign that the management of the company is putting the company's assets to effective use. See R. Chirinko, 'Q' in The New Palgrave Dictionary of Finance and Money, eds. J. Eatwell, M. Milgate, and P. Newman (1992).
19. S. Nesbitt, 'Long-term Rewards from Shareholder Activism: A Study of the "CalPERS Effect"' [1994] 1 J. of Applied Corporate Finance 75.
20. See J. Hawley and A. Williams with J. Miller, 'Getting the Herd to Run: Shareholder Activism at the California Public Employees' Retirement System (CalPERS)' (1994) 6 Business and the Contemporary World 26.
21. Blair, op. cit., n. 12, at p. 14.
22. L. Gordon and J. Pound, 'Governance Matters: An Empirical Study of the Relationship between Corporate Governance and Corporate Performance' (1991) mimeo, John F. Kennedy School of Government, Harvard.
23. J. Pound, 'The Rise of the Political Model of Corporate Governance and Corporate Control' (1993) 68 New York University Law Rev. 1003.
24. The 1996 struggle over the Archer-Daniel's Midland Board is a dramatic example of this issue. In the autumn of 1996, ADM was fined $100 million for illegal price fixing. Dwayne Andreas, who until recently had been the CEO and Chair of the Board since the 1970s, had early in 1996 responded to shareholder complaints by superficial changes to the board. His changes still retained his relatives and so-called independent directors who had extensive dealings with ADM. The fines finally forced Andreas to step down.
25. W. Lazonick and M. O'Sullivan, 'Big Business and Corporate Control' in The International Encyclopedia of Business and Management, ed. M. Sawyer (1995) ; A. Chandler, Jr., Scale and Scope: The Dynamics of Industrial Capitalism (1990).
26. W. Lazonick and M. O'Sullivan, 'Big Business and Corporate Control' in The International Encyclopedia of Business and Management, ed. M. Sawyer (1995) ; A. Chandler, Jr., Scale and Scope: The Dynamics of Industrial Capitalism (1990).
27. L. Donaldson and J.H. Davis, 'Board Company Performance - Research Challenges the Conventional Wisdom' (1994) 2/3 Corporate Governance, at 152.
28. id., at p. 159.
29. J. Karpoff, P. Malatesta, and R. Walking, 'Corporate Governance and Shareholder Initiatives: Empirical Evidence' (August 1995), mimeo.
30. id., at pp. 22-3.
31. D. Strickland, K. Wiles, and M. Zenner, 'A Requiem for the USA: Is Small Shareholder Monitoring Effective?' (forthcoming) J. of Financial Economics.
32. id., pp. 13-14.
33. id., at p. 16.
34. T. Opler and J. Sokobin, 'Does Coordinated Institutional Activism Work? An Analysis of the Activities of the Council of Institutional Investors' (August 1995), mimeo.
35. id., at p. 7.
36. S. Wahal, 'Pension Fund Activism and Firm Performance' (1995), mimeo. This paper is based on Wahal's Ph.D. dissertation at the University of North Carolina. The public pension funds studied are from California, Colorado, New York, Pennsylvania, Wisconsin, and Florida. The sample also includes the Teachers' Insurance Annuity Association: College Retirement Equities Fund (TIAA-CREF).
37. See Monks and Minow, op. cit., n. 9, at p. 153. The six companies were General Motors, American Express, Westinghouse, IBM, Eastman Kodak, and Borden Inc.
38. J. Grundfest, 'Just Vote No: A Minimalist Strategy for Dealing with Barbarians Inside the Gate' (1993) 45 Stanford Law Rev. 857.
39. id., at p. 900. In the 'April coup' referred to in the quotation, GM board member John Smale replaced CEO Robert Stempel as chairman of the board's executive committee. At that time the board also demoted two of Stempel's lieutenants and made other changes in senior management. In late October 1995 rumours of Stempel's dismissal began to circulate and on 2 November he was replaced.
40. id., at p. 887. Goodyear's return was 169.6 per cent versus 10.7 per cent for the S&P 500 (the Standard and Poor top 500 listed companies) during the eighteen months after the event. Allied-Signal's return was 101.6 per cent versus 15.7 per cent for the S&P 500 during the eighteen months after the event. Allied-Signal's return was 101.6 per cent versus 15.7 per cent for the S&P 500 during the seventeen months after the event.
41. See T. Ghilarducci, Labor's Capital: The Economics and Politics of Private Pensions (1992) at 45-6. On the types of different private-sector and public-sector pension funds in the United States of America, see M. Blair, Ownership and Control (1995) 155-65; J. Hawley and A. Williams, 'Corporate Governance in the United States: The Rise of Fiduciary Capitalism', working paper, School of Economics and Business Administration, Saint Mary's College of California (1996).
42. See T. Ghilarducci, Labor's Capital: The Economics and Politics of Private Pensions (1992) at 45-6. On the types of different private-sector and public-sector pension funds in the United States of America, see M. Blair, Ownership and Control (1995) 155-65; J. Hawley and A. Williams, 'Corporate Governance in the United States: The Rise of Fiduciary Capitalism', working paper, School of Economics and Business Administration, Saint Mary's College of California (1996).
43. See T. Ghilarducci, Labor's Capital: The Economics and Politics of Private Pensions (1992) at 45-6. On the types of different private-sector and public-sector pension funds in the United States of America, see M. Blair, Ownership and Control (1995) 155-65; J. Hawley and A. Williams, 'Corporate Governance in the United States: The Rise of Fiduciary Capitalism', working paper, School of Economics and Business Administration, Saint Mary's College of California (1996).
44. Brancato Report on Institutional Investment, The Victoria Group, Fairfax, Virginia, (September 1995) at 31, fig. 9.
45. Hawley and Williams, op. cit., n. 38.
46. There are still hostile takeovers occurring and, indeed, there always will be since there are always profits to be made when share prices fluctuate. Not only does the rumour of hostile takeovers make prices spike up; but hostile takeovers can change management and thus the profitability for the firm. The slow down in hostile takeovers occurred mostly because by the early 1990s two-thirds of the nation's largest firms had adopted poison pills and other effective protections against hostile takeovers. There were over 400 acquisitions of publicly traded companies in 1988, but this had fallen by half in the mid-1990s. See M. Unseem, Investor Capitalism (1996) 27-8.
47. Pound, op. cit., n. 21.
48. id., at p. 1007.
49. id., at p. 1009.
50. B. Black, 'Agents Watching Agents: The Promise of Institutional Investor Voice' (1992) 39 UCLA Law Rev. 811.
51. M. Porter, Capital Choices: Changing the Way America Invests in Industry (1992).
52. S. Kellock and C. Rosenberg, 'The Role of Taft-Hartley Funds in the Corporate Governance Debate' (1995) 3 Corporate Governance Advisor 12-16.
53. J. Hawley, 'Worker-friendly, and Investors are Wary' Bloomberg Business News, s. 5, 21 April 1996 at 7.; Hawley and Williams, op. cit., n. 38.
54. J. Hawley, 'Worker-friendly, and Investors are Wary' Bloomberg Business News, s. 5, 21 April 1996 at 7.; Hawley and Williams, op. cit., n. 38.
55. F. Norris, 'Unusual Proxy Fight at Pittston' The New York Times, 5 May 1989 at 32.
56. T. Hebbs, 'United States Private Placement Debt Markets in the 1990s' (1996) mimeo, Harvard University School of Business, Proceedings from the Steelworkers, Labor and Capital Strategies Conference June 1996.
57. Blair, op. cit., n. 38.