Exclusive Representation of Employee Shareholders in the Board: Issues and Economic Consequences

Abstract

This research proposes to study the consequences of "exclusive" representation of employee shareholders in the board of directors or trustees regarding the company's performance. The literature is controversial on the efficiency of management by directors representing employee shareholders. However, the work does not distinguish between representing employee shareholders only (outcome from an association of employee shareholders or a FCPE (company investment fund) of those elected by all employee or derived form of a labour organization. Our empirical study based on a sample of companies in the SBF 250, highlights the negative influence of the presence of directors representing employee shareholders on the economic performance of the firm.

Assessing the applicability of a corporate governance index in Maltese listed entities

“…b Director remuneration: the more appropriate the remuneration committee and its policies, the more probable the attractiveness and adequacy of remuneration (MFSA, 2013); performance-based remuneration could promote higher director's incentives (Mallin, 2004); and fixed/variable segregation of remuneration could result in more verifiability (Bezzina et al, 2012;Barrett et al, 2004. ) c Ownership structure: institutional shareholders lead to agency cost minimisation and pressure for better director decisions (Bezzina et al, 2012;Sarkar et al, 2012); minority shareholder safeguards could minimise expropriation problems (Guedes and Loureiro, 2007;Standard and Poor's, 2004); and director or employee shareholding could promote goal congruence (Noamene and Hassairi, 2012).…”