Would switching the selection of board members away from shareholders to employees (subject to bribery controls within campaigns, for salaries and stuff) limit the short-termism that the current corporate world seems to face?

  • $\begingroup$ I don't understand how that would limit short-termism. Why do you think employees are any less shortsighted than investors? $\endgroup$
    – Tobias
    Mar 14, 2017 at 15:34
  • $\begingroup$ Shareholders only look for growth in their money. The viability of a business model, or any other factor, is subservient to the $ that can be extracted. Employees like stability - electing CEOs who strip companies of assets, or pay out unreasonable dividends is less likely because it adds risk to their futures. Shareholders don't care - much easier to shift money into the next vehicle compared to changing jobs. $\endgroup$ Mar 14, 2017 at 15:39
  • $\begingroup$ This is a completely unfounded assumption, it may be true or it may not be true. If you look - for example - at the way unions often behave, it seems they are also more than willing to trade off long term viability of a business against short term wage increases. $\endgroup$
    – Tobias
    Mar 14, 2017 at 20:00

1 Answer 1


In Sweden, 2 employees are members of the board in companies over 25 employees (by law). So at least here, not all board members are choosen by the shareholders.

One of the reasons many shareholders have stocks, is to influence the long term way the company is run. The main way to do this is by influencing which people are on the board. If big shareholders could not influence this, the cost of new capital into the companies would increase very much. Because with less influence there is a larger risk, and the way you pay for larger risk is by larger return on investments.

So in short, while it seems on the surface that it could limit the "short-termism", as you call it, it may actually have the opposite effect.

  • $\begingroup$ "If big shareholders could not influence this, the cost of new capital into the companies would increase very much" But there are companies with different classes of voting and non-voting shares, and where they get the same dividends, the price differential tends to be quite small. So the market would seem to disagree with your assertion. $\endgroup$
    – 410 gone
    Mar 14, 2017 at 21:15
  • $\begingroup$ The assumption you make is that shareholders make better decisions on average than employees about the functioning of the business. Given that they are rarely experts in the field they invest in, this seems to be a weak assumption. Shareholders want a combination of higher and less risky returns. So then the question is whether employees would make better decisions, both from a growth and risk perspective. $\endgroup$ Mar 18, 2017 at 16:48

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