One Share-One Vote, Market for Control and Corporate Democracy

Kazuhiko Mikami
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Kazuhiko Mikami: School of Economics, Kwansei Gakuin University

No 15, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: This paper attempts to provide a framework for the formal analysis of the institution of voting in a corporation. I assume that there is a market for control, and examine whether corporate democracy is attained through voting by shareholders. It is shown that whether corporate democracy is attained or not depends on the managers' preferences over the risk of the projects. It is also shown that, while higher reward makes managers more risk tolerant and hence bring3 the competitive outcome closer to the democratic solution, it also tends to induce collusion between the rival managers and then to realize a collusive outcome that is far from the democratic solution.

JEL-codes: L20 L23 (search for similar items in EconPapers)
Pages: 22 pages
Date: 1997-05, Revised 1997-05
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http://192.218.163.163/RePEc/pdf/kgdp15.pdf First version, 1997 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:15

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