Soft Shareholder Activism

47 Pages Posted: 8 Dec 2011 Last revised: 11 Aug 2020

See all articles by Doron Levit

Doron Levit

University of Washington, Foster School of Business; European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: September 10, 2018


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 beneficial to the firm. I show that the threat of voice (launching a public campaign) facilitates communication, while the option to exit facilitates communication if and only if the proposal is risky relative to the status quo or voice is ineffective as a governance mechanism. The analysis identifies the factors that contribute to successful dialogues between investors and firms.

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

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

Suggested Citation

Levit, Doron, Soft Shareholder Activism (September 10, 2018). Review of Financial Studies, Forthcoming, Jacobs Levy Equity Management Center for Quantitative Financial Research Paper, Available at SSRN: or

Doron Levit (Contact Author)

University of Washington, Foster School of Business ( email )

434 Paccar Hall, 4273 E Stevens Way NE
Seattle, WA 98195
United States

HOME PAGE: http://

European Corporate Governance Institute (ECGI) ( email )

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

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics