The GameStop and meme-stock trading frenzy are evidence of a potential revolution in corporate governance and signal the rise of Generation Y (“Millennials”) and Generation Z (“GenZ”) as retail investors. In a new article, we discuss how these investors, who we call wireless investors, could set in motion a social movement able to change the way shares are held and voted and, ultimately, redefine the purpose of public corporations. The social movement will start with wireless investors exercising their right to vote their shares and, by doing so, promoting their environmental, social, and governance (“ESG”) values. This will cause other retail investors, and some institutional investors, to follow suit, thus returning corporations to their partly-private, partly-public purpose.
Millennials and GenZ grew up gaming and bring gaming-like dynamics to their trading. They use new communication technologies, social media, apps, and online forums, such as the Reddit subreddit WallStreetBets (together, “online communication venues”) to coordinate their actions in a gaming-like fashion and obtain unprecedented results. WallStreetBets Redditors even coordinate their efforts beyond their trading activities. They recently made headlines by funding symbolic gorilla adoptions through The Dian Fossey Gorilla Fund International and have donated to other social causes as well. Their sizeable donations come not from just a few sources but from a myriad of individuals.
WallStreetBets Redditors’ investing trends and donations appear to be in line with the generational characteristics of wireless investors. Wireless investors prefer to invest directly, through apps like Robinhood and Webull, rather than through brokers or other intermediaries popular with so-called Baby Boomers (“Boomers”). In addition, Millennials and GenZ blame Boomers for a variety of social and environmental problems, including climate change and the Great Recession. Moreover, studies on Millennials’ investing preferences reveal that they are more strongly oriented toward ESG investments than Boomers and show a generational shift in investing priorities.
The United Nations has tapped into wireless investors’ affinities for gaming as well as the environment and society. It recently used gaming to survey over 1.2 million people in 50 countries on their attitudes toward climate change. The playable advertisement appeared in mobile games and also was used to raise awareness about climate-related policy choices. Also, gaming has been used to enhance engagement across various fields and is gaining traction in the mainstream.
In addition to increasing engagement, gaming dynamics and online communication venues facilitate the diffusion of ideas and information globally, allowing millions of people to aggregate their efforts toward common purposes. The WallStreetBets Redditors’ motto “together strong” reflects this phenomenon.
There are indications that wireless investors are expanding into corporate governance issues. Their enthusiasm for ESG investing suggests that they would also advocate for ESG corporate governance, potentially mounting a social movement using online communication venues and gaming dynamics. That combination might change the way shares are held and voted. For example, it would likely facilitate a significant disintermediation of investments, allowing people to withdraw their money from institutional investors and buy corporate shares directly. Such a phenomenon will likely lead to a significant increase in retail shareholders’ engagement in corporate governance, especially via voting. In addition, disintermediation might cause institutional investors to vote with wireless investors to prevent a significant reduction of assets under management. As a result, an increasingly large number of other investors will be drawn to ESG voting, leading to a cascade effect.
As more investors vote in line with ESG values, ESG voting could become a social norm. It also could become the easiest way to vote, as investors would be following others’ popular choices. Furthermore, as ESG voting begins to have an impact and other people see that ESG goals can be achieved through corporate governance, two results will be achieved. First, investors who were initially concerned with being powerless with respect to ESG goals would finally join the effort as they would see their votes count. Second, wireless investors and other early adopters’ efforts would be reinforced, and they would be prompted to expand their efforts. This could snowball into a collective power to steer corporations toward ESG goals. As a result, corporations could become the major force for serving the welfare of a broader range of stakeholders, a shift that would, ironically, come at the hands of shareholders.
 Clare Duffy, First GameStop, now gorillas. Redditors are pouring money into saving apes, CNN Business, (March 16, 2021, 6:00 PM ET), https://www.cnn.com/2021/03/16/investing/wallstreetbets-gorillas-reddit/index.html.
 Christina Hadley, WallStreetBets is America, Vox (Feb. 4, 2021, 8:00 am EST), https://www.vox.com/the-goods/22264303/wallstreetbets-reddit-gamestop-stocks-language-community; Victoria Park & Kris Bramwell, Reddit investors adopt 3,500 gorillas in six days, BBC (March 18, 2021), https://www.bbc.com/news/business-56416954.
 Maitaine Sardon, Millennials Prefer Apps to Humans, for Financial Advice, WSJ (March 16, 2020 12:45 pm ET), https://www.wsj.com/articles/millennials-prefer-apps-to-humans-for-financial-advice-11584377127.
 See, e.g., Allianz ESG Investor Sentiment Study (May 2019), https://www.allianzlife.com/-/media/files/allianz/pdfs/esg-white-paper.pdf?la=en&hash=1DE90B73C82847769EAB94B29A819834E8984C6F; Morgan Stanley Institute for Sustainable Investing, Sustainable Signals: Individual Investor Interest Driven by Impact, Conviction and Choice (2019), https://www.morganstanley.com/pub/content/dam/msdotcom/infographics/sustainable-investing/Sustainable_Signals_Individual_Investor_White_Paper_Final.pdf.
 Afdhel Aziz, Playing for the Planet: How Playmob Helped the UN Conduct the Largest Climate Chance Survey Ever Using the Power of Gaming, Forbes (Jan. 28, 2021, 12:00 PM EST), https://www.forbes.com/sites/afdhelaziz/2021/01/28/playing-for-the-planet-how-playmob-helped-the-un-conduct-the-largest-climate-change-survey-ever-using-the-power-of-gaming/?sh=3d2c21ae510f.
This post comes to us from professors Sergio Alberto Gramitto Ricci at Monash University and Christina M. Sautter at Louisiana State University’s Paul M. Hebert Law Center. It is based on their article, “Corporate Governance Gaming,” forthcoming in the Nevada Law Journal, 22 Nev. L.J. (2021) and available here.