Shareholder Cultivation and New Governance
New York Law School
February 13, 2014
Forthcoming in Delaware Journal of Corporate Law (DJCL), 2014
Several formal proposals have been made to address shareholder short-termism and speculative behavior. These include the imposition of a financial transaction tax, changes to the U.S. capital gains tax rate, and the adoption of an Investor Stewardship Code in the United Kingdom. This Article reverses the focus from looking to top-down solutions to looking at bottom-up grass root solutions that corporations can employ, and in some cases do already employ to achieve substantially the same effect of rewarding certain types of shareholder behavior while dissuading others — a process I refer to as “Shareholder Cultivation.” While many of the techniques and strategies discussed in this Article are not new and in fact many have been used by companies and investor relation professionals for years, the Article is the first to conceptualize a prescriptive framework for assessing which techniques and strategies should be allowed. Additionally, the Article utilizes new governance theory to examine the concept of Shareholder Cultivation with a fresh lens: as a corporate governance benefit.
Number of Pages in PDF File: 99
Keywords: corporate governance, shareholder cultivation, steward, new governance, loyalty
JEL Classification: G30, K20, K22, K33, L10, L20, L21, L50, M10, M14Accepted Paper Series
Date posted: February 14, 2014
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