'Low Cost' Shareholder Activism: A Review of the Evidence
RESEARCH HANDBOOK ON THE ECONOMICS OF CORPORATE LAW, Claire Hill & Brett McDonnell, eds., Elgar Publishers, Forthcoming
42 Pages Posted: 2 Dec 2010
Date Written: December 1, 2010
In this study, I review the evidence on 'low-cost' tools of shareholder activism, such as shareholder proposals and shareholder votes in uncontested director elections, and make suggestions for future research. This form of activism contrasts with what I call 'activism via large ownership', which requires significant equity stakes (e.g. hedge fund activism, proxy fights). 'Activism via large ownership' is not an option for a large class of investors (e.g. diversified funds) and it is prohibitively costly to implement in large firms. Hence, it is important to understand the effectiveness of low-cost activism, also in view of recent regulatory reforms empowering shareholders, such as say on pay, proxy access and the elimination of broker non-votes.
Keywords: Shareholder Activism, Shareholder Voting, Shareholder Proposals, Director Elections, Votes Withheld, Proxy Access, Say on Pay
JEL Classification: G34
Suggested Citation: Suggested Citation