Business Commons^™

Initiation Payments, Scott Hirst

Faculty Scholarship

Many of the central discussions in corporate governance, including those regarding proxy contests, shareholder proposals, and other activism or stewardship, can be understood as a single question: Is there under-initiation of corporate changes that investors would collectively prefer?

This Article sheds light on this question in three ways. First, the Article proposes a theory of investor initiation, which explains the hypothesis that there is under-initiation of collectively-preferred corporate change by investors. Even though investors collectively prefer that certain corporate changes take place, the costs to any individual investor from initiating such changes through high-cost proxy contests, or even low-cost shareholder …

What’S Scope 3 Good For?, Madison Condon

Faculty Scholarship

Opposition to the Securities and Exchange Commission’s (“SEC”) new rule on updated climate risk reporting has focused on one category of disclosures as particularly objectionable: Scope 3 emissions.⁷ Otherwise known as “supply chain emissions,” Scope 3 emissions have been voluntarily reported by a growing number of companies since the term was invented as part of the Greenhouse Gas Protocol in 2001.⁸ They include all the emissions both up and downstream of a corporations’ own activities: the emissions of the privately-owned factory that produced the shoes Target sells, as well as the emissions you burn while driving to the …

How Much Do Investors Care About Social Responsibility?, Scott Hirst, Kobi Kastiel, Tamar Kricheli-Katz

Faculty Scholarship

Perhaps the most important corporate law debate over the last several years concerns whether directors and executives should manage the corporation to maximize value for investors or also take into account the interests of other stakeholders and society. But, do investors themselves wish to maximize returns, or are they willing to forgo returns for social purposes? And more broadly, do market participants, such as investors and consumers, differ from donors in the ways in which they prioritize monetary gains and the promotion of social goals?

This project attempts to answer these questions with evidence from an experiment conducted with 279 …

The Remainder Effect: How Automation Complements Labor Quality, James Bessen, Erich Denk, Chen Meng

Faculty Scholarship

This paper argues that automation both complements and replaces workers. Extending the Acemoglu-Restrepo model of automation to consider labor quality, we obtain a Remainder Effect: while automation displaces labor on some tasks, it raises the returns to skill on remaining tasks across skill groups. This effect increases between-firm pay inequality while labor displacement affects within-firm inequality. Using job ad data, we find firm adoption of information technologies leads to both greater demand for diverse skills and higher pay across skill groups. This accounts for most of the sorting of skills to high paying firms that is central to rising inequality.

Ai And Jobs: The Role Of Demand, James Bessen

Faculty Scholarship

In manufacturing, technology has sharply reduced jobs in recent decades. But before that, for over a century, employment grew, even in industries experiencing rapid technological change. What changed? Demand was highly elastic at first and then became inelastic. The effect of artificial intelligence (AI) on jobs will similarly depend critically on the nature of demand. This paper presents a simple model of demand that accurately predicts the rise and fall of employment in the textile, steel, and automotive industries. This model provides a useful framework for exploring how AI is likely to affect jobs over the next 10 or 20 …

Poverty Tourism, Justice And Policy, Kevin Outterson, Evan Selinger, Kyle Whyte

Faculty Scholarship

Based on moral grounds, should poverty tourism be subject to specific policy constraints? This article responds by testing poverty tourism against the ethical guideposts of compensation justice, participative justice, and recognition justice, and two case descriptions, favela tours in Rocinha and garbage dump tours in Mazatlan. The argument advanced is that the complexity of the social relationships involved those tours requires policy-relevant research and solutions.