With the approaching dominance of text messaging, mobile internet and social networking, some are asking when new many-to-many communications will impact on corporations and global finance. Some are hoping that these technological innovations will create a corporate democracy, forcing shareholders to take responsibility for the decisions made by the company which they have a stake in.
Will we see Twitter being used by shareholders to mobilise support or opposition to corporate decisions? And will they be the ones to bring ethics back into capitalism? Like it or not, shareholders are the owners and are responsible for their actions. Some argue that shareholders are unlikely to be knowledgeable enough to participate meaningfully in corporate discussions, but we have seen this argument before in relation to political democracy.
Roughly a quarter of all shares are held by retail investors, instead of by pension funds or hedge funds, and only a small proportion of those retail investors tend to vote on key business decisions. Websites have been springing up aiming to educate shareholders about corporate decision-making, in an attempt to try to influence the outcome.
Proxy Democracy is just one website which allows shareholders to track upcoming board meetings and resolutions, as well as predicting how big institutional investors will vote. A shareholder logging on could check the details of shareholder meetings to see how institutional investors are opposing or supporting management. With this knowledge retail investors can know best how to use their vote, whether that be teaming up with the bigger investors or opposing the management team. Proxy Democracy attempts to report this information neutrally.
Whether providing this kind of material will really produce decisive and active shareholders or not remains to be seen, and if political voting is anything to go by, voter apathy is taking hold and votes are rarely hotly-contested. Corporate news is occasionally exciting and worthwhile, but often it is tedious and uninteresting to the majority of people, even those who own stock in the company in question.
Regardless, burgeoning technologies will inevitably penetrate the corporate world, and will allow shareholders to find and talk to each other much more easily. Their conversations will be what makes the difference, as it seems doomed to wait for regulations to fix the corporate sector, it has to come from the shareholders. While the evolution of communications might make shareholders more aware of their responsibility, there’s no guarantee that they will respond in the way these philanthropic activists hope.