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Soft Shareholder Activism

48 Pages Posted: 8 Dec 2011 Last revised: 1 Jun 2017

Doron Levit

University of Pennsylvania - Finance Department

Multiple version iconThere are 2 versions of this paper

Date Written: May 31, 2017


This paper studies communications between investors and firms as a form of corporate governance. The main premise is that activist investors cannot force their ideas on companies; they must persuade the board or other shareholders that implementing these ideas is in the best interest of the firm. In this framework, I show that voice (launching a public campaign) and exit (selling shares) enhance the ability of activists to govern through communication. The analysis identifies the factors that contribute to successful dialogues between investors and firms. It also shows that public communications are likely to be ineffective, justifying the prevalence of behind-the-scenes communications.

Keywords: Cheap-Talk, Communication, Corporate Governance, Exit, Shareholder Activism, Voice

JEL Classification: D82, D83, G23, G32, G34

Suggested Citation

Levit, Doron, Soft Shareholder Activism (May 31, 2017). Available at SSRN: or

Doron Levit (Contact Author)

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

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