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date: 30 June 2022

Abstract and Keywords

Rent-sharing between employees and shareholders is a necessity if the societal value of the firm is to be maximized. This is reflected in laws across the world which, in different ways, underpin job security and worker voice. Where employees have no role in firm-level governance and are weakly protected by regulation, contractual arrangements intended to align investor and worker interests often fail. A growing body of empirical evidence, drawing in part on leximetric data, points to the beneficial economic effects of employment protection and codetermination laws for innovation and productivity. These laws also promote equality, in contrast to laws mandating additional protections for shareholders to those provided by basic corporate law, which are distributionally regressive as well as being of questionable value for efficiency.

Keywords: corporate governance, employment relations, shareholder rights, corporate law, employee protection, innovation, takeover bids, residual income, shareholders, employees

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