Voting Power and Shareholder Activism: A Study of Swedish Shareholder Meetings

15 Pages Posted: 26 Jul 2010

See all articles by Thomas Poulsen

Thomas Poulsen

Copenhagen Business School, Department of International Economics and Management, Center for Corporate Governance

Therese Strand

Copenhagen Business School, Center for Corporate Governance

Steen Thomsen

Copenhagen Business School

Abstract

Politicians and companies that desire active shareholders could improve the amenability of firms to shareholder influence by ownership transparency, shareholder committees, contacts with shareholder associations and other vehicles for collective action.This paper offers a new voting power approach to the study of shareholder activism. We show the empirical implications of this approach, but also the importance of local institutions such as nomination committees in shaping the nature of shareholder activism.We find that firms' amenability to small shareholder influence leads to more proposals by the nomination committee, but fewer proposals by other shareholders and fewer proposals voted against. We interpret this as evidence that the shareholder elected nomination committees effectively channel shareholder concerns and preempt other kinds of activism. In addition, we find more shareholder activity in large firms and less activity in leveraged firms.This paper analyses the impact of voting power on shareholder activism using unique data on activism at Swedish shareholder meetings. We hypothesize that there is a positive relationship between shareholder activism and a measure of the largest shareholder's sensitivity to increased participation by small shareholders.Empirical This paper analyses the impact of voting power on shareholder activism using unique data on activism at Swedish shareholder meetings. We hypothesize that there is a positive relationship between shareholder activism and a measure of the largest shareholder's sensitivity to increased participation by small shareholders. We find that firms' amenability to small shareholder influence leads to more proposals by the nomination committee, but fewer proposals by other shareholders and fewer proposals voted against. We interpret this as evidence that the shareholder elected nomination committees effectively channel shareholder concerns and preempt other kinds of activism. In addition, we find more shareholder activity in large firms and less activity in leveraged firms. This paper offers a new voting power approach to the study of shareholder activism. We show the empirical implications of this approach, but also the importance of local institutions such as nomination committees in shaping the nature of shareholder activism. Politicians and companies that desire active shareholders could improve the amenability of firms to shareholder influence by ownership transparency, shareholder committees, contacts with shareholder associations and other vehicles for collective action.

Suggested Citation

Poulsen, Thomas and Strand, Therese and Thomsen, Steen, Voting Power and Shareholder Activism: A Study of Swedish Shareholder Meetings. Corporate Governance: An International Review, Vol. 18, Issue 4, pp. 329-343, July 2010. Available at SSRN: https://ssrn.com/abstract=1647233 or http://dx.doi.org/10.1111/j.1467-8683.2010.00811.x

Thomas Poulsen (Contact Author)

Copenhagen Business School, Department of International Economics and Management, Center for Corporate Governance ( email )

Porcelaenshaven 24
Frederiksberg, 2000
Denmark

Therese Strand

Copenhagen Business School, Center for Corporate Governance ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Steen Thomsen

Copenhagen Business School ( email )

Porcelaenshaven 24A
Copenhagen, 2000
Denmark
+45 38152590 (Phone)
+45 38152500 (Fax)

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