Voting on public goods: citizens vs shareholders
File(s)
Accepted version
Author(s)
Döttling, Robin
Levit, Doron
Malenko, Nadya
Rola-Janicka, Magdalena
Type
Journal Article
Abstract
We study the interplay between a ``one person-one vote’’ political system and a ``one share-one vote” corporate governance regime. If shareholders push firms for more pro-social policies, political backlash may arise, undoing these initiatives. If public policy is frictionless, shareholder democracy becomes irrelevant: the political system fully offsets shareholder influence. With public policy frictions, pro-social corporations can mitigate regulatory shortcomings and enhance corporate public goods provision. Nevertheless, shareholder democracy can hurt citizens due to the representation problem: it favors the preferences of the wealthy. Investor diversification, pass-through voting, and corporate greenwashing have important implications for these trade-offs of shareholder democracy. (JEL D62, D72, G28, G34, G38, H23)
Date Issued
2026-06-05
Date Acceptance
2026-04-21
Citation
The Review of Financial Studies, 2026
ISSN
0893-9454
Publisher
Oxford University Press
Journal / Book Title
The Review of Financial Studies
Copyright Statement
© The Author(s) 2026. Published by Oxford University Press on behalf of The Society for Financial Studies. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0/), which permits unrestricted reuse, distribution, and reproduction in any medium, provided the original work is properly cited.
License URL
Publication Status
Published online
Date Publish Online
2026-06-05