Analysis of the Article by Margret Blair: Employees and Corporate Governance

Through the question, Margret Blair had two views that were considered in the 1980s and the 1990s. The first one involved the frame that was considered in the debate that took place in the 1980s and the second view was about the hostile takeover and the leveraged buyouts. In the discussion, it was stated that the United States cooperation are lazy since they are letting corporate executives take charge and build empires instead of allowing investors or invest in the project that will benefit both the country and the shareholders. The second view is about the hostile takeover and buyouts when a company or a corporation is collapsing or not performing as expected. It is advised to remove companies that are not performing and make sure their replacements pay a significant amount of money to balance the cash flow and be back on their feet but in the form of debt service. It also acts as compensation after discarding the poor performing companies.

The shareholders of the corporation are advised to be guided on how the principle of corporate governance work. This includes on how to maintain the balance of the cash flow. They are expected to support any decisions made to meet the goal that was stated before signing a contract. The shareholders should also be respected and value the principle since it is the reason for them to have the upper hand when it comes to enhancing the investors and has oversight. The principles include; the maximizing for the shareholders so that they can maximize on the overall wealth that has been created by the corporate. The shareholder should also have managers and directors that can maximize the values of the shares. Through maximizing the value of the shares, it is the same as adding great value to total value.

When it comes to maintaining the financial markets, an investor who is an outsider is allowed to have a control of companies especially in hostile buyouts, the managers, and the directors. Some laws apply to the corporates, for example in the united states there are laws, for instance, there is shareholder primacy. This has worked well over the years, and it is advised that other countries apply the primacy managements. The third principle is about how financial markets should have securities like financial security. The shareholders will be impressed with the financial security layout because they have the same common stocks since the performance of the stock price depends on the value created by them.

In summary, Margret Blair explains how the shareholders and investors should be working, and she argues on how it affects the united states both positively and negatively. The positive part of the argument it allows the corporates of the united states can know what to so that it can grow instead of just being lazy. She continues to give few principles that should be followed for positive feedback to both the shareholders and the investors even if it is an outsider. According to Blair, if we focus on the corporate directors and the managers especially on increasing the price of the shareholdings, there will be growth.

References

Blair, M. M., & Roe, M. J. (Eds.). (2010). Employees and corporate governance. Brookings Institution Press.

Stout, L.A., Robe, J.P., Ireland, P., Deakin, S., Greenfield, K., Johnston, A., Schepel, H., Blair, M.M., Talbot, L.E., Dignam, A.J. and Dine, J., 2016. The Modern Corporation Statement on Company Law.

https://www.brookings.edu/wp-content/uploads/2016/06/Blairrevised-61115.pdf

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=425500