Is American Shareholder Activism a Social Movement?

Abstract

This Essay argues that shareholder activism in the United States is a social movement in which middle- and working-class shareholders, and the institutional investors that represent them, are mobilizing to reshape the distribution of power in corporate governance. Across various stages stretching over the last century, the shareholder activism movement has been defined by bursts of collective action challenging the structures of corporate power and the elites atop the corporate hierarchy. Americans have come to view shareholding and stock trading as important modes of resistance to the economic and political status quo and, as a consequence, shareholder mobilization is intensifying.

The social movements approach widens the aperture on corporate governance law as a field of study. The modern American corporate law academy, which has examined shareholder activism mainly through the lens of efficiency and agency costs, has failed to recognize shareholder activism as an evolving process of disruption. The mainstream approach has inhibited corporate law scholars from studying corporate governance as a dynamic system for reconciling economic and socio-political power. That inhibition, in turn, has caused scholars to miss an important process that is currently underway. A social-movements approach suggests that the current surge of activism—led by elite asset managers, with a young, tech-enabled class of retail investors visible on the horizon—is one stage in a sustained movement that stretches back more than a century.