Federalization of Corporate Governance

This chapter examines the federalization of corporate governance from both historical and contemporary perspectives. It addresses gaps in the corporate governance framework and recommends the implementation of improved standards on the federal levels. These recommendations focus on such timely matters as board of director composition, greater gender and racial diversity on corporate boards, employee representation on boards, adoption of director term limits, excessive executive compensation, the implementation of a more realistic definition of “independent director,” and shareholder access to a company’s proxy statement to nominate a specified number of directors. The chapter also posits that federal court invocation of state law principles to ascertain the parameters of the federal securities laws in the corporate governance sphere is misplaced in view of the entrenched federalization of corporate governance.

Board Level Employee Representation and Tax Avoidance in Europe

In part due to recent disclosures of large-scale tax evasion (e.g. Panama Papers), corporate tax avoidance has become a prominent public policy issue around the world. An increasing amount of research on this topic has focused on identifying the determinants of tax avoidance at the company and country level. Many newer studies examine differences in corporate governance as one of these determinants. However, this literature almost entirely neglects the role of board level employee representation (BLER), despite the fact that this form of ‘stakeholder governance’ is widespread in Europe. This paper addresses this gap in the literature by examining the relationship between BLER and tax avoidance at the company level. Two mechanisms are identified through which BLER might influence corporate tax behavior: 1) reduction in agency costs through monitoring and 2) the voting power of workers as board members to enter into coalitions with management and/or shareholders. Based on a sample of 2343 European listed companies between 2012 and 2017, this paper shows that companies with BLER have a higher effective tax rate (ETR) than companies without workers on the board. The analysis suggests that the ability to form coalitions through voting power is a more significant channel for influencing tax behavior than the monitoring mechanism. The policy implications are that governments should consider ‘stakeholder governance’ such as BLER as one measure supporting their efforts to combat tax avoidance.

A munkavállalói képviselet részvételi jogosítványai a gazdasági társaságok,valamint üzemeik irányítása terén az euroatlanti régióban és Magyarországon

The study deals with employee participation in corporate and plant management, showing the historical course of the formation and development from the early twentieth century to the end of World War II. Following World War II, the European Coal and Steel Community (ECSC) developed a system of 50-50% ownership and employee representation in both areas, which in the early 1970s was transformed into two-thirds ownership and one-third employee representation. Next, the study presents the structural nature of the current participatory institutional system, the electoral system, and the licensing system in a comparative manner.

Trust as the cement in the employment relationship? The role of trust in different workplace employment relations regimes

PurposeThis paper addresses the puzzle of why the same workplace employment relations regimes can lead to different performances and why different regimes can produce the same performance. It is argued that the incidence of mutual, and not necessarily unilateral, trust between the employee representation and the management accounts for these differences, as mutual trust fosters information sharing and helps to strike deals that are mutually beneficial. Against the background that the institutional and organizational characteristics of some workplace employment relations regimes also constitutes information sharing and joint decision making, the author further argues that mutual trust is a functional equivalent.Design/methodology/approachMethodologically, the article is international and cross-country comparative in nature and conducted on the basis of a unique, large and transnational comparable data set of the employment relationship at firm level in eleven countries.FindingsOur results show that strong mutual trust is associated with significantly higher incidences of increases in firm profitability, regardless of the workplace employment relations regime in which the firms are embedded.Practical implicationsThe results clearly indicate that trust between the employee representation and the management works as a functional equivalent to performance enhancing employment relations regimes. Therefore, some policy recommendations and imposed institutional reforms of employment relations regimes by the IMF and the European Central Bank in some countries are sub-optimal and might not have been necessary. Trust building initiatives between the employee representation and the management are therefore an alternative, which is less conflictual and could have the same effect on the performance of firms.Originality/valuePrevious analyses on differences in the performance effects of workplace employment relations regime concentrated almost exclusively on institutional factors. Factors that account for differences in the functioning of regimes such as in particular the role of trust were not considered before. Against this background, the originality of this analysis is that it clearly shows that it is not sufficient to consider only the institutional and organizational structure of regimes, but it is essential for a better understanding of the effects of the employment relationship to consider factors which account for the functioning of the regimes such as, in particular, trust.