The mainstream economic theory that guides corporations in the US only works if markets are perfectly efficient. This flawed theory has led to corporate decision-making that centers shareholders above all else, including other stakeholders (e.g., workers), long-term business growth, and economic health. This shareholder-first ideology is referred to as “shareholder primacy,” which does not reflect
In a working paper, Roosevelt Senior Economist and Policy Counsel Lenore Palladino investigates whether stock buybacks occur more frequently, independent of other factors, when corporate insiders are selling their own personal shareholdings. In her empirical analysis of the relationship between insider sales and stock buybacks, Palladino finds that a 10 percent increase in insider sales
Tomorrow at Walmart’s shareholders’ meeting in Bentonville, Arkansas, Walmart workers will call out America’s broken corporate governance system and propose that Walmart workers be included on its board of directors. Walmart associate Cat Davis will be joined by Senator Bernie Sanders (I-VT), who will speak on behalf of workers’ right to participate in corporate decision-making.
Economic inequality is on the rise. Corporate “shareholder primacy” means that the vast majority of today’s record corporate profits are used to increase the wealth of shareholders, through dividends and stock buybacks. Meanwhile, real wages for non-executive workers have essentially remained stagnant for decades. Increasing worker bargaining power in the 21st century is necessary, and
This blog post is based off of remarks given at “Wall Street and the Next Recession: Protecting Main Street in the Next Economic Downturn,” an event co-sponsored by Americans for Financial Reform and the Center for Popular Democracy at the US Senate. One thing is certain about markets: they go up and they go down.
Corporate profits are at record highs and unemployment is below 5 percent, yet 40 percent of Americans say that they would not be able to meet a $400 emergency. For too long we’ve been guided by the 50-year-old myth that fewer regulations and lower taxes on corporations and the wealthy will lead to economic growth
Rejecting the Theory of the Firm: Why the ‘Free-Market’ Economy is a Myth and How to Rebuild Public Power
Companies today are not working the way that most Americans, policymakers, or the media think that they do. To fight inequality, we need to rewrite the laws that guide corporations. We must first, however, change the way that people understand the role of the American firm in our economy and explore how we can deploy
Profit over Patients: How the Rules of Our Economy Encourage the Pharmaceutical Industry’s Extractive Behavior
The pharmaceutical industry isn’t working for most people in the US. Over 80 percent of Americans across the political spectrum believe that lowering drug costs should be a “top priority” for lawmakers and believe that prescription drug costs are “unreasonable.” This growing scrutiny presents an opportunity to question the ways that drug corporations run business, as
FOR IMMEDIATE RELEASE: February 21, 2019 CONTACT: Ariela Weinberger, firstname.lastname@example.org Kathy Mulady, email@example.com Creation of a Crisis: Why the Pharmaceutical Industry Chooses Profit Over People New issue brief explores how US policy choices have led to high drug prices, low health care investment, misaligned incentives, and escalating CEO pay across the pharmaceutical industry
For nearly half of a century, America’s public corporations have been driven by a shareholder primacy approach to corporate governance, increasingly prioritizing shareholder payments over other, more productive uses of corporate resources. Over the same period, employee bargaining power has decreased and wages for nonexecutive workers have remained flat across sectors. In Ending Shareholder Primacy in Corporate Governance,