Images of the Shareholder – Shareholder Power and Shareholder Powerlessness

RESEARCH HANDBOOK ON SHAREHOLDER POWER, 53-73 (J. Hill, R.S. Thomas, eds., Edward Elgar Publishing, UK, 2015)

Sydney Law School Research Paper No. 15/86

NYU Law and Economics Research Paper No. 15-23

34 Pages Posted: 26 Sep 2015 Last revised: 3 Jun 2020

See all articles by Jennifer G. Hill

Jennifer G. Hill

Monash University - Faculty of Law; European Corporate Governance Institute (ECGI)

Date Written: September 23, 2015

Abstract

This chapter argues that effective regulation requires legal paradigms that accord with commercial reality, yet that some shareholder images are today seriously outmoded, and used selectively, inconsistently and used to achieve particular ends. The chapter assesses recent regulatory developments in the light of major changes to capital markets, whereby institutional investors are now the dominant shareholders in many parts of the world, and argues that regulation is still playing catch-up with this new commercial reality.

The chapter shows that shareholder power can be viewed in a positive or negative light, and explores a range of contemporary regulatory issues against this backdrop. These issues include, for example, the implications of investor ‘sophistication’ in the light of the Goldman Sachs’ Abacus scandal during the global financial crisis. The chapter also discusses the significance of shareholder image for judicial decision-making, and considers several cases, including the Delaware Supreme Court decision, Kahn v M& F Worldwide Corp (2014). Finally, the chapter examines regulatory developments based on the view that shareholder power is a positive corporate governance attribute, such as (i) the UK Shareholder Stewardship Code; and (ii) increased shareholder participation in the regulation of executive pay.

Keywords: Comparative corporate governance, shareholder power, institutional investors, enforcement of directors’ duties, shareholder stewardship, say on pay

JEL Classification: D70, G30, G32, G34, G38, K22

Suggested Citation

Hill, Jennifer G., Images of the Shareholder – Shareholder Power and Shareholder Powerlessness (September 23, 2015). RESEARCH HANDBOOK ON SHAREHOLDER POWER, 53-73 (J. Hill, R.S. Thomas, eds., Edward Elgar Publishing, UK, 2015) , Sydney Law School Research Paper No. 15/86, NYU Law and Economics Research Paper No. 15-23, Available at SSRN: https://ssrn.com/abstract=2664430

Jennifer G. Hill (Contact Author)

Monash University - Faculty of Law ( email )

Wellington Road
Clayton, Victoria 3800
Australia

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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