What Will AI Do To Corporate Governance?

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AI accelerates many things. One of those things, you might assume, is business strategy. Or, at a more established level, corporate governance.

To put it another way, the business strategy of larger businesses, i.e. corporations, will probably be heavily influenced by AI. And what will the technology drive these corporate behemoths to do?

We know, intuitively, that AI, all things being equal, tends to reinforce existing trends. So if the goal is to make money for shareholders, AI is likely to take that objective and run with it, supercharging those returns to share or dividend holders.

I was reading this illuminating piece from the Harvard Law School Forum on Corporate Governance by Pierluigi Matera, and I wanted to break down some bits of this, to consider what our economies are likely to do in response to more powerful AI.

Sharing and Showing Values

Matera begins with this (please forgive the lengthy block quote):

“Artificial intelligence (AI) is rapidly transforming corporate governance. While much attention has focused on AI’s impact on operations, compliance, and risk management, its influence on shareholder activism deserves equal scrutiny—particularly as younger, technologically fluent investors bring their generational values to bear on corporate decision-making. This evolution signals the potential emergence of identity-driven activism: a form of shareholder engagement that reflects priorities beyond short-term returns, such as climate action, diversity, and long-term social accountability—or any other cause, whatever it may be, to the extent that it creates common ground. Millennials and Gen Z investors, armed with AI-enabled tools, are increasingly capable of identifying causes they care about, crafting targeted proposals, and coordinating collective action with remarkable precision and speed.”

All of that sounds promising, in the sense that younger small investors may have more progressive ideals. But then Matera writes:

“Empirical data from the 2022–2024 proxy seasons suggest that AI’s democratizing potential remains structurally constrained, with its primary benefits accruing to large and well-resourced actors.”

Saying that AI’s democratizing and shareholder activism remain “structurally constrained” sounds, well, less hopeful, on the whole.

Matera then goes into four “signals” supporting the idea of constrained change, first, suggesting that some of the more idealistic shareholder proposals “have increased in volume, yet now face mounting resistance,” that millennials are participating less than was expected, and that activists are winning fewer board seats.

Here’s the last of the four related assertions verbatim:

“Fourth, although AI is increasingly embedded in activist strategies—including predictive analytics, sentiment analysis, and voting simulations—these technologies remain largely concentrated in the hands of institutional investors and well-capitalized funds. Millennial-led or grassroots initiatives have yet to gain meaningful access to, or benefit significantly from, these technological advancements.”

That’s pretty clear: the big fish keep winning.

Economy and Cyberwarfare

Let me show you this segment of the essay line by line. First, Matera contends:

“At the same time, corporations are deploying AI to strengthen their defenses against activist interventions.”

Part of the idea is the use of AI for forecasting:

“Companies are turning to predictive modeling and sentiment tracking to uncover vulnerabilities, anticipate potential challenges, and reinforce the position of incumbent boards.”

To what end?

“From AI-generated earnings scripts to sophisticated risk assessment systems, these innovations are being harnessed to consolidate managerial control—making it more difficult for dissidents to succeed.”

And this observation:

“In many cases, the same algorithmic tools that empower activists are being repurposed to neutralize them.”

Matera concludes:

“This dual use of AI highlights a core paradox: the same technology that promises to decentralize influence may also entrench existing power structures.”

That sounds daunting to someone who thinks that AI can change the world for the better.

The Future is Unwritten

There’s a significant ambiguity in the end of Matera’s piece, here, which the writer titles the past is prologue:

“The transformative potential of AI may indeed represent a new chapter in corporate governance—one built upon the foundations of what has come before, yet oriented toward a future rich with possibility. While the data remain inconclusive, the fulfillment of this promise may ultimately depend on whether directors anticipate rather than resist generational change. With foresight and responsibility, this next chapter could well be one of innovation, inclusivity, and enduring progress.”

So, things could go either way.

Thoughts from an Experienced Business Leader

I also wanted to include this: recently, I sat down with Mark Lynch, former top brass member at eBay and Microsoft, among others, to talk about how all of this works in the age of AI.

Lynch started with an anecdote that he says shaped his thinking in high school.

“When I was a freshman in high school, my brother, who was a junior, came home one day from his economics class and said, ‘Mark, I just learned that the purpose of the economy is to make profits for shareholders.’ I thought, ‘Oh, really? I thought the purpose was to make the stuff we need. I thought it was to give us jobs. I thought, you know, that's what it's all about. He said, no, no, that's what I learned. He's the authority figure. He's my big brother, and the teacher was even more of an authority figure. And sure enough, all through the 70s and 80s, this message was broadcast: the purpose of the economy is to make profits for shareholders.”

The subtext of Lynch’s story is that this is not a good top-level objective. But I digress.

The Neoliberal Age – and What Comes Next

Speaking further on the economy, Lynch defined neoliberalism for us.

“Neoliberalism is the name that we give to the era that really started in the 70s and 80s,” he said. “It was based on the economics of that time, the 50s and the 60s. It sort of created an era that we all know. We think of it as economics. Before that, there was Keynesianism that went on for decades.”

Then he spoke to the future.

“There will be things that come next,” Lynch continued, “and one of the questions is: Are we at a moment of change? I think there's enough going on that makes me feel like we are in that sort of moment. A lot of people, maybe the majority of Americans, don’t feel that the economy is working for them. We have degraded our natural environment. We have we have AI looming above us. It's going to cause massive change one way or the other. So this is the moment of change.”

He returned to something he presented early in the discussion: the need to make AI work in ways that are beneficial to humans.

“Every change brings opportunity,” he said. “I'm not a tech optimist. I spent my career in technology. I think technology can solve human problems, and I think the purpose of the economy is to solve human problems that then enable us to flourish. That's what we want our economy to do for us, and it doesn't, always.”

He ended with this:

“I think the right way to measure things is: does this innovation solve something that helps us make life better for ourselves?”

I agree.

Stay tuned.