Remarks before the American-Hellenic Chamber of Commerce

Good evening. [U.S.] Ambassador [Kimberly Ann] Guilfoyle, Chair [Vassiliki] Lazarakou [of the Hellenic Capital Market Commission], President [John] Saracakis [of the American-Hellenic Chamber of Commerce], distinguished guests, and friends-thank you for the warm welcome and thank you to the American-Hellenic Chamber of Commerce for organizing today's conference and this event.[1] I would like to express my gratitude to Ambassador Guilfoyle, whose energy and commitment to strengthening the U.S.-Greece relationship have already made a meaningful impact.

The economic relationship between the United States and Greece is one of the most productive-and perhaps one of the most under-appreciated-partnerships in the world. Our countries share foundational principles: open markets, strong institutions, and a belief that private enterprise fuels prosperity. Not to mention that millions of Americans have ancestral ties to Greece.

Earlier today at the 12^th Corporate Governance Conference, we had a conversation about sustainability reporting, board structures, and the role of regulators. That discussion prompted a broader reflection on the logic of governance-specifically, the difference between shareholder democracy and political democracy. While both carry the word democracy, the use of the shared word might suggest that the same principles govern both systems. They do not.

To make that case, let's start where the Greeks always started: with the right words. The ancient Greeks understood the importance of using the right words to describe different concepts. Consider the word "economy," which today often refers to national production, trade, and finance. But its Greek root is oikonomia, which means management of the household: how resources were allocated, how members were organized, and how the unit sustained itself over time. This was distinguishable from politika-the governance of the polis, the city-state. Different rules, different purposes, different forms of accountability. The Greeks were precise enough to give each domain its own word-because they understood that blurring the logic of one with the other produced not wisdom, but confusion.

In the same way, political democracy and shareholder democracy operate on different foundations. Political democracy rests on equal civic standing: every citizen has a voice, regardless of economic stake or expertise. In contrast, shareholder democracy is voluntary and proportionate to risk: influence corresponds to the amount of capital that an investor puts at stake. It is the shareholder who stands to lose his or her capital if the company fails that has a stake in the company's governance. In the shareholder primacy theory of corporate governance, we seek closer alignment between decisions of management and the financial interests of shareholders.

Some argue that corporate governance concerns extend beyond the shareholders. Employees, customers, suppliers, communities, and governments have an interest in how companies operate. This has been sometimes referred to as stakeholder governance. However, if the board is accountable to "everyone," then it is effectively accountable to no one.

Of course, employees, communities, and others do have real interests-but our political and legal systems exist precisely to protect those interests, through laws governing labor, consumer protection, the environment, taxation, and other more specific topics. Boards need to manage these concerns, but always with an eye to their investors-since they are the ones who have their capital at risk.

Experience shows that when corporations are asked to resolve issues that the political system has struggled to address, the results often disappoint-not because the goals are unworthy, but because corporate governance was not designed for that purpose.

So if political democracy's logic does not fit corporate governance, what does? The answer is market reaction. Shareholders express their views through investment decisions. Companies with subpar governance structures face a higher cost of capital and a lower stock price. This mechanism is self-correcting and proportional to economic stake.

Greece gave the world democracy. But the Greeks also gave us the habit of examining our words carefully before applying them-of asking whether the language we use actually fits the things we are describing. Oikonomia is not politika.

Tonight, that tradition encourages us to ask what kind of governance best fits the specific circumstances of a particular company. Corporate governance, done well, is its own form of accountability-rigorous, specific, and oriented toward the people who have put their capital at risk-which should lower that firm's cost of capital. It is not a lesser version of political democracy. It is a different institution, serving a different function, with its own logic and its own integrity.

Both America and Greece share the same goal of having robust capital markets that will produce economic growth, job creation, and innovation. By strengthening ties through the capital markets and investment between our two countries, we can look forward to a stronger relationship between our two nations in the future.

Thank you.