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Soft Shareholder Activism

Doron Levit

University of Pennsylvania - Finance Department

October 2013

This paper studies informal communications (voice) and exit as alternative ways through which shareholders can influence managers when obtaining control is not feasible or too costly. By focusing on the interaction between financial markets and the incentives of activist investors to communicate with managers, the analysis relates the effectiveness of voice and exit to market liquidity; entrenchment and compensation structure of managers; and expertise, liquidity and ownership size of activist investors. Importantly, I characterize the circumstances under which activist investors prefer to voice themselves publicly rather than engaging with managers behind the scenes.

Number of Pages in PDF File: 58

Keywords: Shareholder Activism, Voice, Exit, Corporate Governance, Communication, Transparency, Cheap-Talk

JEL Classification: D74, D82, D83, G34

working papers series

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Date posted: December 8, 2011 ; Last revised: October 26, 2013

Suggested Citation

Levit, Doron, Soft Shareholder Activism (October 2013). Available at SSRN: http://ssrn.com/abstract=1969475 or http://dx.doi.org/10.2139/ssrn.1969475

Contact Information

Doron Levit (Contact Author)
University of Pennsylvania - Finance Department ( email )
The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

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References:  29
Citations:  2

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