Macroeconomic Policy Regimes in Western Industrial Countries by Herr Hansjörg;Kazandziska Milka; & Milka Kazandziska

Author:Herr, Hansjörg;Kazandziska, Milka; & Milka Kazandziska
Language: eng
Format: epub
Tags: Economics, Finance, Business & Industry
Publisher: Taylor & Francis Group
Published: 2011-02-15T00:00:00+00:00

2.8.5 Stakeholder corporate governance

In a regulated capitalism, shareholder corporate governance has to come to an end. Management should be forced again to organise a compromise among all stakeholders. Also democracy should not end in factories. Especially employees and their representatives should be given the right to take part in firms’ decision-making. Such firm structures existed in the 1950s and 1960s and it is only a political matter to go back to structures in the tradition of stakeholder capitalism. Such a step involves several elements.

The role of the financial system in the form of anonymous owners or short-term oriented investment funds, private equity funds and so on should become less important for management decision-making. Firms should try to increase their equity base and finance a substantial part of their investment out of profit. Tax policy could support such a development, for example by taxing profits that are paid out to owners higher than those that kept in a firm. It should be forbidden to pay dividends or pay income to owners if firms make no profit.99 Also the possibilities to buy back own shares should be limited to very special cases. And last but not least, hostile takeovers should be made very difficult. Such policies take away the pressure of the management to care for the short-term development of share prices and to orient corporate governance towards short-term targets, which can destabilise long-term development and reduce productivity. Bonus systems (share-options, etc.) for management (also for management in non-finance enterprises) have to be cut down.

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