Research Repository

Corporate Governance, Wealth and Income Inequality

Brou, Daniel and Chatterjee, Aroop and Coakley, Jerry and Girardone, Claudia and Wood, Geoffrey (2021) 'Corporate Governance, Wealth and Income Inequality.' Corporate Governance: An International Review. ISSN 0964-8410 (In Press)

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Abstract

Research Question/Issue There has been growing concern about rising social inequality and its effects on general well-being and the polity. Much of this rise can be traced to changes in the manner in which corporations or firms are governed and how this impacts on income and wealth dispersion. This study systematically reviews the most recent literature on external and internal corporate governance (CG) that deals with the issue of income and wealth inequality. Research Findings/Insights External mechanisms such as institutional regime (defined in terms of varieties of capitalism—liberal or coordinated markets) and financialization reveal important insights, often implicitly, into what makes or sustains inequality. The rise of the platform business model raises explicit concerns about increasing wealth and wage inequality. This is because it is associated with a rapidly growing precariat of gig workers, Big Tech entrepreneurs with untrammeled levels of control and extreme levels of personal wealth, and widespread tax avoidance despite record profits. The literature on internal CG is somewhat constrained in its reliance on agency theory and a focus on shareholder primacy. This only provides limited insights on how internal CG mechanisms impact on inequality. However, in recent work, the issue of perverse incentives posed by CEO reward systems and their impact on organizational sustainability and wage dispersion are receiving increasing attention. Theoretical/Academic Implications Some studies do attempt to widen the lens, and we suggest a greater focus on theorizing codetermination and alternate forms of ownership, non-monetary incentives, the power of the Big Tech companies, and those strands of comparative institutional analyses that explore the determinants of internal CG structures. Practitioner/Policy Implications The study reasserts the importance of the firm as a central analytical paradigm in understanding income and wealth inequality and that, in seeking to ameliorate the latter's negative consequences, more attention needs to be accorded to the governance and regulation of firms.

Item Type: Article
Divisions: Faculty of Social Sciences > Essex Business School
Faculty of Social Sciences > Essex Business School > Essex Finance Centre
Depositing User: Elements
Date Deposited: 08 Jun 2021 15:14
Last Modified: 14 Aug 2021 18:15
URI: http://repository.essex.ac.uk/id/eprint/30552

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