The Bonding Effects of Directors’ Statutory Wage Liability
An Interactive Corporate Governance Explanation
Bibliographic Data
| ID | 6089951 |
|---|---|
| Authors | Ronald B Davis (University of Toronto, corresponding author) |
| Year | 2002 |
| Volume | 24 |
| Issue | 4 |
| Pages | 403-432 |
| Publication date | 2002-10-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Law & Policy (JOURNAL) |
| Journal identifiers | ISSN: 0265-8240 • E-ISSN: 1467-9930 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/j.0265-8240.2002.00162.x |
| OpenAlex | W2135912028 |
| Language | EN |
| Citations received | 1 |
Canadian corporate directors are personally liable to the corporation's employees for unpaid wages. The dominant rationale is the protection of vulnerable employees. A proposal under consideration to exonerate directors from this liability responds to claims that directors of financially troubled corporations resign prematurely, lessening the realized value potential of the firm. Scholars have also argued that a “liability chill” causes directors to make inefficient, risk‐averse investment decisions while the corporation is solvent. Paradoxically, exoneration may actually decrease the value of the firm because directors’ liability for employees’ wages increases efficiency in corporate governance by reducing agency costs. It serves as a bond by directors to corporate stakeholders that they will diligently restrain harmful managerial behavior
Agency (philosophy · Agency cost · Business · Corporate governance · Corporate law · Corporation · Economics · Enterprise value · Labour economics · Liability · Political science · Shareholder · Statutory law · Value (mathematics · Wage · Corporate Finance and Governance · Law · Accounting · Finance
| Citations per year | 0.06 |
|---|---|
| Citation span | 2008 - 2008 (1) |
| Highly cited | No |