My guess is not that much, though it depends on the details.
In a traditional corporation, the board is elected by the shareholders to protect their interests. If everyone is attentive, it seems like the shareholders might start voting partly based on how the board members would influence the windfall. You could imagine political parties nominating candidates for the board that shareholders would choose between depending on their ideology as well as their expertise with regard the object-level business of the firm. If this is the case, it seems we’ve basically reverted to a delegated democracy version of shareholder primacy where shareholders effectively get part of their dividend in the form of a pooled DAF vote.
If directors/shareholders act with a perhaps more typical level of diligence for corporate governance, I would expect the board to provide a check on the most gross violations (e.g. spending all the money on yachts for the CEO, or funding Al Qaeda) but to give the CEO and management a lot of discretion over playpumps vs AMF or Opera vs ACLU.
In practice, the boards of many tech startups seem quite weak. In some cases the founders have super-voting shares; in other cases they are simply charismatic and have boards full of their friends. You can verify this for many of the large public tech companies; I don’t know as much about governance at the various LLM startups but in general I would imagine governance to be even weaker by default. In these cases I wouldn’t expect much impact from board oversight.
More as food for thought… but maybe “broad investor base” is a bit of exaggeration? Index funds are likely to control a significant fraction of these corporations, and it’s unclear if the board members they appoint would represent ordinary people. Especially when owning ETF != owning actual underlying stocks.
Due to the rise of index funds (they “own” > 1⁄5 of American public companies), it seems that an alternative strategy might be trying to rise in the ranks of firms like BlackRock, Vanguard, or SSGA. It’s not unprecedented for them to take action (partly for selfish reasons); here are examples of BlackRock taking stances on environmental sustainability and coronavirus cure/vaccine.
Good question!
My guess is not that much, though it depends on the details.
In a traditional corporation, the board is elected by the shareholders to protect their interests. If everyone is attentive, it seems like the shareholders might start voting partly based on how the board members would influence the windfall. You could imagine political parties nominating candidates for the board that shareholders would choose between depending on their ideology as well as their expertise with regard the object-level business of the firm. If this is the case, it seems we’ve basically reverted to a delegated democracy version of shareholder primacy where shareholders effectively get part of their dividend in the form of a pooled DAF vote.
If directors/shareholders act with a perhaps more typical level of diligence for corporate governance, I would expect the board to provide a check on the most gross violations (e.g. spending all the money on yachts for the CEO, or funding Al Qaeda) but to give the CEO and management a lot of discretion over playpumps vs AMF or Opera vs ACLU.
In practice, the boards of many tech startups seem quite weak. In some cases the founders have super-voting shares; in other cases they are simply charismatic and have boards full of their friends. You can verify this for many of the large public tech companies; I don’t know as much about governance at the various LLM startups but in general I would imagine governance to be even weaker by default. In these cases I wouldn’t expect much impact from board oversight.
More as food for thought… but maybe “broad investor base” is a bit of exaggeration? Index funds are likely to control a significant fraction of these corporations, and it’s unclear if the board members they appoint would represent ordinary people. Especially when owning ETF != owning actual underlying stocks.
From an old comment of mine: