In Sync: Why Stocks in Some Markets Move Together
When asked to predict activity in the stock market, J.P. Morgan replied that stock prices would fluctuate. Modern finance theory ascribes meaning to these fluctuations. The stocks of successful, well-run, or lucky companies rise. Those of unsuccessful, misgoverned, or unlucky companies fall. While portfolio managers view the volatility of individual stocks as a problem to be overcome through diversification, corporate executives watch their stocks rise … [ Read more ]
Content: Article | Authors: Bernard Yeung, Randall Morck | Source: STERNbusiness (NYU) | Subjects: Economics, Finance
When Labor Has a Voice in Corporate Governance
Employees may not make good owners after all! Faleye,Mehrotra,and Morck study firms where there are large blocks of employee owned shares that ARE VOTED. Their findings may surprise some people: “Relative to otherwise similar firms, labor-controlled publicly traded firms invest less, take fewer risks, grow more slowly, create fewer new jobs, have worse free cash flow problems, and exhibit lower labor and total factor … [ Read more ]
Content: Article | Authors: Olubunmi Faleye, Randall Morck, Vikas Mehrotra | Source: Social Science Research Network (SSRN) | Subjects: Corporate Governance, Finance