Stock buybacks, union power, and the anti-investment class
April 25, 2018 9:21 AM   Subscribe

“Demands on firms intensified with the rise of ‘activist investors,’ formerly known as corporate raiders. As institutional investors became large shareholders of major corporations, they pressured firms to push up share prices by maximizing short-term profits. Since such institutional investors could move their investments around easily, firms grew more responsive to capital markets than to their customers. For public companies, key regulatory and legislative changes allowed for a greater focus on stock prices. In 1982, Congress passed the safe-harbor provision for buybacks, which formerly would have been considered market manipulation.” - How Shareholder Primacy Hurts Jobs and Wages (Law And Political Economy)
posted by The Whelk (52 comments total) 29 users marked this as a favorite
 
This supports something I've been thinking for quite some time--the constant pressure on businesses to increase stock value is unrealistic and unsustainable. I have been feeling very nervous that all my retirement investments are in "the market" in one way or another. We are discouraged from "safe" investments in bonds, treasury bills, cds, etc. by having interest rates kept incredibly low. In order to "keep up" we are encouraged to put our money into what is becoming more and more like a Ponzi scheme. While I do have some bonds, I'm looking at moving more money into "safer" areas. Unfortunately, if the Stock Market has a serious "correction" (i.e. crash) all bets are off and everything goes down the tubes. I don't want to get into buying gold and stuffing it under my mattress, but I'm not feeling very sanguine about my retirement. We are going to have to face the music at some point that our consumer society is not working--we can't keep buying stuff--I think we are going to have to make major changes. Unfortunately, we usually don't make big changes without going through a lot of pain first. That has been true in my personal life and I believe it will be true for humanity in general. Yes, these are the cheery thoughts running 'round in my brain.
posted by agatha_magatha at 9:36 AM on April 25, 2018 [15 favorites]


Capitalism only works when "Consumers" and "Labor" count at least as much as Capital.
posted by DigDoug at 9:56 AM on April 25, 2018 [7 favorites]


A invest management company just bought a 5% stake of the large company I work for.

Considering they are described as a "vulture fund" on the wiki page. It will be interesting to see how this turns out.
posted by KaizenSoze at 10:19 AM on April 25, 2018


I looked up the Wikipedia entry on vulture funds. It's unnerving.
posted by ZeusHumms at 10:25 AM on April 25, 2018


Capitalism at its worst, or one of its worsts, it's hard to choose.
posted by theora55 at 10:27 AM on April 25, 2018 [2 favorites]


Thus the changing nature of work—the rise of the fissured workplace and the gig economy—is driven not just by a generic drive for profit or the attributes of the “knowledge economy,” but a structural shift within corporations from a productive to financialized use of corporate cash.

The empirical data on financialization's effect on income inequality is fascinating!

For further reading, Kent Greenfield is a law professor who frequently critiques shareholder primacy. In a paper called "The Place of Workers in Corporate Law" (1998) he argues that the interests of workers are the best proxy for the interests of the firm because they're so invested in the firm's health and longevity (duh)—whereas shareholders, who tend to have diverse investment portfolios, "are relatively indifferent as to the possibility of any firm failing." Anyway, the point (of the FPP article) is that corporate managers and shareholders need not care about the health, longevity, or productivity of the firm . . . 'cause they can get rich quick regardless.

Thanks so much for this, The Whelk!
posted by materialgirl at 10:34 AM on April 25, 2018 [9 favorites]


. . . and actually, they get rich quicker by intentionally acting against the interests of the firm.
posted by materialgirl at 10:36 AM on April 25, 2018 [7 favorites]


. . . and actually, they get rich quicker by intentionally acting against the interests of the firm.

See e.g. Sears or Toys ‘R’ Us
posted by Sangermaine at 10:41 AM on April 25, 2018 [6 favorites]


KaizenSoze, Last year Bain Capital bought the company at which I've worked for the past 11 years.
The Toys R Us news is on a lot of our minds. This view of the business world is not my favorite, for sure.
posted by DigDoug at 10:45 AM on April 25, 2018


US founders were initially wary of companies, having just won their independence from behemoths like the East India Company of London. They severely restricted the activities of corporations to prevent them from interfering with politics or manipulating the economy. How far we've come (fallen). Unless and until we citizens take back the power from capital, we will be subjected to ever increasing control by large companies and wealthy individuals.
posted by Mental Wimp at 10:46 AM on April 25, 2018 [11 favorites]


One of the more radical ideas I have about this that will never happen is to hold shareholders directly and legally responsible for the actions of the companies they invest in whether it's a mutual fund, portfolio or individual stocks. Any/all of it - you are directly responsible and no longer able to turn a blind eye to diversified portfolios that mix in stuff like arms and weapons manufacturers with more benign companies and stocks.

Including board members.

Including jail time.

You share the profits? You share the legal and moral risks.
posted by loquacious at 10:56 AM on April 25, 2018 [12 favorites]


It's important for workers to have ownership of the means of production, huh?
posted by clawsoon at 11:19 AM on April 25, 2018 [15 favorites]


loquacious . . . I would settle for any decision-maker (shareholder or otherwise) being held legally responsible for the company's actions!
posted by materialgirl at 11:24 AM on April 25, 2018 [4 favorites]


so buy-backs versus dividends are a distinction without a difference. Its all a return of capital, one just happens to be more efficient (both tax and in terms of per share).

The broader issue is one of underinvestment in businesses - and here ultimately the pigeons will come home to roost as they always do, it just will take time. Rates going up will accelerate this process (as replacing equity with debt, which is essentially what these guys are doing a lot of the time adds a fixed cost that will turn out not to be fixed.)

Look at a Kraft Heinz sharerprice chart - the market is already figuring this out.
posted by JPD at 11:51 AM on April 25, 2018


I think we are going to have to make major changes

Ban the stock market.

All stocks have a fixed price and the only investment income they generate is dividends.

That way, companies can still raise capitol, investors can still make money, but it's not a bullshit poke & giggle, wolf & sheep show any more.

Nearly impossible to implement. Much more so than slaying a hungry dragon.
posted by CynicalKnight at 12:08 PM on April 25, 2018 [3 favorites]


you do realize a stocks price is ultimately related to the cash flow it generates right? So what happens to you shares if the dividend falls? Why would anyone buy them from you at the now lower yield?

Yes - in the short-term share prices are pretty much bullshit, but ten-years plus pretty indicative of the amount of money a business makes.
posted by JPD at 12:14 PM on April 25, 2018


Also the most egregious examples of pulling cash out of a business are pretty much universally privately run businesses.
posted by JPD at 12:15 PM on April 25, 2018 [1 favorite]


Who thinks in 10-year spans when the money is made in microseconds?
posted by MtDewd at 12:19 PM on April 25, 2018


Who makes money in microseconds?
posted by JPD at 12:31 PM on April 25, 2018


> Capitalism only works when "Consumers" and "Labor" count at least as much as Capital.

This is wrong, and the reason it's wrong is important.

Capitalism — the practice of having the people who own the means of production direct the economy — only works if labor is relatively powerless compared to capital. This is because profit in capitalist systems is derived from the mismatch between the price of labor-time and the value of the goods that can be made using that labor-time; to wit, if you own the means of production, you can buy labor time for n dollars, use that labor-time to produce goods worth n+m dollars, and thereby skim off m dollars worth of profit for yourself — without doing any work. What's great is that you can plow your m dollars back into the business — acquire more productive property — and thereby increase the amount of goods you sell; over time this recursive process results in nearly all the money (and all the power) accruing to a few big capitalists.

If labor counts as much as capital, you can't get that good deal; workers will claim the full value of their work for themselves, and the feedback loop won't ever be set up — this is the breakdown of capitalism, and its replacement with a system wherein workers, rather than capital-owners, make all the meaningful economic decisions.

In short: what you are describing is socialism, not capitalism. We currently live under capitalism; the maintenance of capitalism requires workers remain in a relatively weak bargaining position and remain required to sell their labor time for less than the value of the goods made using it. Getting from the world we're in to the world you'd like to live in — a socialist world — will require seizing power away from capitalists.

This is, needless to say, easier said than done.
posted by Reclusive Novelist Thomas Pynchon at 12:38 PM on April 25, 2018 [10 favorites]


Share buy-backs and dividends are roughly equivalent ways of returning profits to shareholders, financially. But share buy-backs, which were formerly mostly illegal, are a gimmick for rich people to avoid taxes. Dividends are taxed whereas buy-backs are not (unless shares are sold, or never, if inherited).

Even though 70% of shareholders, for example institutions like pensions and individual IRAs and 401(k)s, are not taxed on dividends, rich people are taxed on dividends and prefer untaxed buy-backs. Moreover, many company executives are compensated with stock options which do not benefit from dividends but do benefit from buy-backs. So company executives are doing buy-backs to benefit a small minority of rich shareholders, including themselves.

Another tax avoidance scheme is rich companies like google and facebook borrowing money on their billions in unrepatriated overseas earnings to finance share buy-backs and return profits to shareholders while completely avoiding both income taxes and dividend taxes.

So companies are doing buy-backs primarily to benefit the rich and their own executives, not the average household shareholder or pension holder. They should be banned, just as they were for half a century. If companies want to return profits to shareholders, they should do so with taxable dividends.
posted by JackFlash at 12:42 PM on April 25, 2018 [9 favorites]


And, more to the point of the original article, some folks have observed that you can turn a quick buck by finding a business where the "pay n for labor, sell goods for n+m, plow m dollars back into the business to expand" mechanism is in place, and instead just extract all the money from the business as quickly as possible. You kill the goose that lays the golden eggs, which reduces your future supply of golden eggs — but greatly increases your current supply of roast goose.

This breaks capitalism. Which you may think is a good thing. However, your goal and mine isn't simply the destruction of capitalism, but instead its replacement with socialism. What's in play here is instead a process that smashes capitalism and replaces it with rubble.
posted by Reclusive Novelist Thomas Pynchon at 12:43 PM on April 25, 2018 [5 favorites]


This is because profit in capitalist systems is derived from the mismatch between the price of labor-time and the value of the goods that can be made using that labor-time; to wit, if you own the means of production, you can buy labor time for n dollars, use that labor-time to produce goods worth n+m dollars, and thereby skim off m dollars worth of profit for yourself — without doing any work. What's great is that you can plow your m dollars back into the business — acquire more productive property — and thereby increase the amount of goods you sell; over time this recursive process results in nearly all the money (and all the power) accruing to a few big capitalists.

Labor isn't the only input, m mostly represents a return on capital, and in aggregate the return on capital is basically the cost of capital.
posted by JPD at 12:47 PM on April 25, 2018


Who makes money in microseconds?

All the important people.
posted by GuyZero at 12:49 PM on April 25, 2018 [3 favorites]


> Labor isn't the only input, m mostly represents a return on capital, and in aggregate the return on capital is basically the cost of capital.

Correct, the rate of return on capital tends over time to fall to the cost of that capital. This is one of the sources of the tremendous productive capacities of capital — capital-owners, or rather the employees who manage the fortunes of capital-owners, have to continually scramble to find new gaps between the cost of capital and the return on capital.

I don't see why the third clause of your statement supports the first clause, since productive capital is itself a commodity produced through buying labor time for less than the value of the commodity made using that labor time.
posted by Reclusive Novelist Thomas Pynchon at 1:08 PM on April 25, 2018 [2 favorites]


All the important people.

HFT is like a high singles ROE business these days.
posted by JPD at 1:13 PM on April 25, 2018


In 1982, Congress passed the safe-harbor provision for buybacks, which formerly would have been considered market manipulation.

Does anyone have more information on this? Is the repeal of this safe-harbor provision an idea worth advocating for?
posted by cosmic.osmo at 1:33 PM on April 25, 2018 [2 favorites]


Anecdotally, when I was at my last job we were contemplating moving a call center. That got fed up to Investor Relations somehow and they fell on us like a ton of bricks. They were adamant that we not have it on site because then they might be represented by the local union. In the end we didn’t move anything.

So much of that job was watching stones being crushed to derive more blood. Staff numbers went down but somehow the work remained the same. Funny how productivity has risen for decades but most workers never see a wage increase...
posted by fifteen schnitzengruben is my limit at 1:48 PM on April 25, 2018 [3 favorites]


HFT is like a high singles ROE business these days.

If you say so, but regardless, people do make money in microseconds.

And considering how many companies have negative ROE, high singles ain't nothing to be ashamed of.
posted by GuyZero at 1:58 PM on April 25, 2018


Excellent article. This bit isn't surprising, but it's enlightening to put numbers on it:

What have companies done so far [with the GOP tax cut]? $171 billion dollars have been spent on share buybacks, whereas only $6 billion has gone to workers’ bonuses and small wage bumps.

And the fact that buybacks were legalized in 1982 adds to the understanding of why the country turned to plutocracy at that time.

The German system of giving labor half the seats on corporate boards is looking even better. (And yes, a controlling vote would be even better.)
posted by zompist at 1:59 PM on April 25, 2018 [8 favorites]


Who makes money in microseconds?

Well, not me.
I don't know a lot about the market, but I was brought up to believe that people put money in the stock market to invest in a company, and the company is helped along by this. I don't see how 'investing' in a business for less than a minute helps that business. High singles ROE sounds like something sustainable, at least more than the double-digit growth everone wants.

I was at IBM when it transitioned to Shareholder Primacy, and it wasn't pretty (speaking as an employee) although it didn't help that the company was losing mainframe profits to PC's at the same time. The whole culture changed, most of the manufacturing was sold off, and the whole focus was set to immediate profit.
posted by MtDewd at 2:35 PM on April 25, 2018


In 1982, Congress passed the safe-harbor provision for buybacks, which formerly would have been considered market manipulation.

The author of the article is in error. The loosening of buy-back rules was instigated in 1982 by John Shad who was appointed to head the SEC by Ronald Reagan and who wrote Rule 10b-18. Congress had nothing to do with it, except looking the other way. Presumably the rule could be revoked by a sufficiently motivated SEC chair or, lacking that, by Congress. Historically, the SEC has primarily worked for Wall Street, not the average investor.
posted by JackFlash at 2:50 PM on April 25, 2018 [6 favorites]


> I don't know a lot about the market, but I was brought up to believe that people put money in the stock market to invest in a company, and the company is helped along by this. I don't see how 'investing' in a business for less than a minute helps that business.

What a system is is what it does in practice, not what it's intended by its designers to do.

To steal an analogy from another mefite: Say you want to get acorns out of trees. You design a handheld device to do so that employs explosive powder to drive a small lead pellet through a metal tube at great speed. You point this device at the branch holding the acorns you want, aim carefully, and pull a trigger. Blammo! you've fetched some acorns. Nevertheless, even though you have an effective tool for fetching acorns, what you've invented isn't an acorn-fetcher. It's a handgun — no matter how much you insist that the purpose of your device is to fetch acorns, and no matter how much you insist that the people using it to shoot at each other instead of acorn-laden tree branches are misusing your device.

Regardless of whether or not the stock market is "meant" to help businesses, the market can be used as a vehicle for profit without regard to the health of the businesses bought and sold over it, and therefore will be used that way. Just like your gunpowder-based acorn-fetcher will be used as a weapon, whether you like it or not.

This is nothing new; it's nearly as old as stock markets themselves. Note that financial instruments to allow for (for example) short selling were invented about five seconds after people got the idea to buy and sell transferable shares of businesses.
posted by Reclusive Novelist Thomas Pynchon at 2:56 PM on April 25, 2018 [7 favorites]


I don't see how 'investing' in a business for less than a minute helps that business.

Being a market maker is a legitimate role in the financial ecosystem. Owning shares in a company seems less appealing if there's no one to sell to much of the time.
posted by GuyZero at 3:42 PM on April 25, 2018


High frequency traders are not market makers. High frequency traders provide "liquidity" when it isn't needed and withdraw "liquidity" when it is needed most. The market does just fine without them.
posted by JackFlash at 3:55 PM on April 25, 2018 [1 favorite]


As I understand it, the way to make money in high frequency trading is to identify when market makers are about to act and then get there a few milliseconds before them.
posted by clawsoon at 4:20 PM on April 25, 2018 [1 favorite]


Guillotines. It should only take a couple of uses before the rest rediscover their ethics.
posted by evilDoug at 9:28 PM on April 25, 2018 [3 favorites]




> Capitalism only works when "Consumers" and "Labor" count at least as much as Capital.
This is wrong, and the reason it's wrong is important.

Capitalism — the practice of having the people who own the means of production direct the economy


I am not qualified for an in depth debate, but I'll amend my statement. Capitalism can ONLY work, when the PEOPLE behind capital and the PEOPLE behind labor and consumers all matter the same. Modern capitalism has conflated market-worth with human-worth in ways that are dangerous to the future of humanity itself.
posted by DigDoug at 5:45 AM on April 26, 2018


In short: what you are describing is socialism, not capitalism. We currently live under capitalism; the maintenance of capitalism requires workers remain in a relatively weak bargaining position and remain required to sell their labor time for less than the value of the goods made using it. Getting from the world we're in to the world you'd like to live in — a socialist world — will require seizing power away from capitalists.

re: bargaining positions (and ownership of the means of production)

How to Reduce the Black-White Wealth Gap - "An answer to this could be to give black children, instead of baby bonds, shares in a social wealth fund. This would be a fund, or collection of funds, run by the government and investing in a broad array of financial assets -- stocks, real estate investment trusts, etc. -- much like the sovereign wealth funds of resource-exporting nations." (thread)

also btw...
Need Work? Maybe That's a Job for Government (thread) posted by kliuless at 6:03 AM on April 26, 2018 [3 favorites]




I like this twitter thread the best cause it shows these pundits don’t know thier history beyond schoolhouse rock, job gaurentee programs where a focus of the Democratic Party for a long time

It is singularly amazing the memory wipe the Regan/Tatcher Years did. Alan Moore used to joke that the UK survived a dystopian dictatorship and came out bungling and unable to move forward and I’m starting to think it wasn’t a joke
posted by The Whelk at 6:33 AM on April 26, 2018 [4 favorites]


> I am not qualified for an in depth debate, but I'll amend my statement. Capitalism can ONLY work, when the PEOPLE behind capital and the PEOPLE behind labor and consumers all matter the same. Modern capitalism has conflated market-worth with human-worth in ways that are dangerous to the future of humanity itself.

The point I'm getting at is that you are presuming that capitalism either is or can be a just system, whereas I am arguing that the engines of capitalism, for better or for worse, necessarily run on the exploitation of the working class, and so necessarily requires the folks who work for a living be in a subordinate position to the people who don't work, but instead own capital. The conditions you say are required for capitalism to work — the condition that we're all actually equal and where the well-being of all is taken into consideration — is specifically the condition under which capitalism can't work.

If you insist that people really must be free to approach each others as equals — real equals — regardless of whether we're people who own productive capital (a few very rich folks) or people with nothing significant to sell other than our labor time (most of us), if you insist on that, what you're talking about is no longer capitalism. It might be socialism, it might be anarchosyndicalism, it might be something weirder — but it's certainly not capitalism.

I understand why you might not like this conclusion. Capitalism is the system we live under currently, capitalism is the system (most of) our parents and grandparents lived under, and it is not at all pleasant to realize that the system we're all in not only doesn't care about our well-being, but actually works best when most of us are miserable.
posted by Reclusive Novelist Thomas Pynchon at 7:05 AM on April 26, 2018 [3 favorites]


That's fair. It makes me go back to

“We live in capitalism. Its power seems inescapable. So did the divine right of kings. Any human power can be resisted and changed by human beings. Resistance and change often begin in art, and very often in our art, the art of words.” ― Ursula K. Le Guin
posted by DigDoug at 9:47 AM on April 26, 2018 [1 favorite]


“We live in capitalism. Its power seems inescapable. So did the divine right of kings. Any human power can be resisted and changed by human beings. Resistance and change often begin in art, and very often in our art, the art of words.” ― Ursula K. Le Guin

posted by DigDoug at 9:47 AM on April 26 [1 favorite +] [!]


When I daydream about our economic system and how to make it work for everyone, I sometimes imagine that had unions, in addition to asking for humane wages, retirement, medical benefits, and working conditions, also demanded gradual ownership by labor, then everyone would be a capitalist and the damn system would work for everyone's good, not just those currently at the top.

Another path would be to require ownership be part of all wage packages, so that eventually a worker would end up with enough share in the company to matter.

A third approach, which I'm starting to like more and more, would be that by law the population of current and former workers own a hefty percentage of the company and that would be a source of post-retirement income as well as adding clout to the board seats occupied by labor. Obviously there would be details to iron out about how big a company, etc.
posted by Mental Wimp at 10:42 AM on April 26, 2018


I mean, there's a thousand ways to fix it. The problem is that the powers that be derive their power from ensuring that it stays broken, and they rather like having power, and they're not quite entirely stupid.

And typically whenever anyone makes a meaningful run at fixing it, they pay the men with guns to make sure it stays broken. see: Paris Commune, Spanish Civil War, Pinochet's coup against Allende, and so on and so on and so on.

And even if the men with guns fail to stop the folks who want to fix it, fighting them off has historically involved putting the entire society on a militarized footing, resulting in something that's itself badly broken, just in different ways than capitalism is broken, and is ripe for takeover by authoritarians. see: Russian revolution.
posted by Reclusive Novelist Thomas Pynchon at 10:56 AM on April 26, 2018 [4 favorites]


Roger Martin, former dean of the University of Toronto business school, has a similar take: Fixing the Game.
The past 70 years have seen three massive, value-destroying market crashes. After each, regulators have attempted to punish wrongdoers and implement fixes to prevent future meltdowns. It hasn't helped, because regulators have focused on symptoms instead of root causes. The only way we can avoid increasingly frequent stock market meltdowns - and all the pain, suffering and economic dislocation they cause - is to explore the theories that underpin American capitalism. One theory in particular deserves our close attention, due its pervasiveness and power - shareholder value theory.

In 1976, finance professor Michael Jensen and Dean William Meckling of the Simon School of Business at the University of Rochester published a seemingly innocuous paper in the Journal of Financial Economics entitled "Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure." It would go on to be the single most frequently cited article in business academia and forms the prevailing theory of the role of the firm and proper compensation in our society today.
posted by russilwvong at 4:57 PM on April 26, 2018 [2 favorites]


Pretty sure Martin wouldn't agree that capitalism is doomed by its internal contradictions, though.

I think a big part of the problem in the US is that political institutions like Congress are paralyzed, and so the rule-setting and regulations which should provided by government are either absent or dysfunctional. See Chrystia Freeland's What Toronto can teach New York and London, describing how banking regulation works in Canada.
posted by russilwvong at 5:01 PM on April 26, 2018


russilwvong: See Chrystia Freeland's What Toronto can teach New York and London, describing how banking regulation works in Canada.
Canada is the only G7 country to survive the financial crisis without a state bail-out for its financial sector.
Uhhh... about that:
Canada’s banks received $114 billion in cash and loan support from both the U.S. and Canadian governments during the 2008-2010 financial crisis. The study estimates that at some point during the crisis, three of Canada’s banks—CIBC, BMO, and Scotiabank—were completely under water, with government support exceeding the market value of the bank.
posted by clawsoon at 5:14 PM on April 26, 2018 [2 favorites]




more!
-Who creates a nation's economic value?
-Rethinking regulation

also btw (from earlier ;)
-Why the "Maximizing Shareholder Value" Theory of Corporate Governance is Bogus
-Maximizing shareholder value: The goal that changed corporate America
-How the cult of shareholder value wrecked American business
-The Dumbest Idea In The World: Maximizing Shareholder Value
-How The 'World's Dumbest Idea' Killed The US Economic Recovery
-How Shareholders Are Ruining American Business
-Markets or Shareholders?

oh and...
Everything is securities fraud.
Here is a paper by Daniel Hemel and Dorothy Lund of the University of Chicago Law School on "Sexual Harassment and Corporate Law," in which they "examine the role of corporate and securities law in regulating and remedying workplace sexual misconduct." The basic mechanism should be familiar to Money Stuff readers:
  1. Company ______s.
  2. People find out that the company ______s.
  3. The stock drops as people worry that the company's ______ing will lead to lawsuits or prosecution or lost customers or reduced employee morale or whatever.
  4. Shareholders sue company for securities fraud, alleging that the company's______ing was material to shareholders and should have been disclosed.
You can put all sorts of things in the ______: Polluting, selling opioids, selling guns, mispricing chickens, the stuff Facebook Inc. got up to with Cambridge Analytica, really anything that anyone finds unattractive. "Securities law," I wrote recently, "is an all-purpose tool for punishing corporate badness." If you put "tolerating and protecting sexual harassers" in the ______, then you can use that all-purpose tool to go after sexual harassment.

It is also, though, kind of an awkward tool for many of its purposes. "When you punish bad stuff because it is bad for shareholders," I also wrote, "you are making a certain judgment about what sort of stuff is bad and who is entitled to be protected from it." If sexual harassment is treated with securities lawsuits on behalf of shareholders, does that mean that the real victims of sexual harassment -- the real victims of any corporate misbehavior, when you think about it -- are the shareholders? Or as Hemel and Lund put it, in discussing "the potential discursive and distributional implications of using laws designed to protect shareholders as tools to regulate sexual harassment":
Just as the rhetoric surrounding common law actions for seduction and trespass suggested that fathers, husbands, and masters were the ones harmed by sexual assault, shareholder derivative actions arising from sexual harassment might be seen as suggesting that investors—rather than the employees who suffer through sexual harassment firsthand—are the victims whose injuries require redress. Moreover, the claim that workplace-based sexual harassment damages shareholders through the misallocation of human capital might be interpreted to imply that the female employees of publicly traded corporations are themselves corporate assets
posted by kliuless at 6:09 AM on April 27, 2018 [1 favorite]


If sexual harassment is treated with securities lawsuits on behalf of shareholders, does that mean that the real victims of sexual harassment -- the real victims of any corporate misbehavior, when you think about it -- are the shareholders?
Interesting. It's like the basis of the common law is being moved from "disturbing the king's peace" to "disturbing the shareholder's peace."
posted by clawsoon at 7:01 AM on April 27, 2018 [1 favorite]


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