Gadflies at the Gate: Why Do Individual Investors Sponsor Shareholder Resolutions?

16 Pages Posted: 11 Aug 2016

See all articles by David F. Larcker

David F. Larcker

Stanford Graduate School of Business; Stanford University - Hoover Institution; European Corporate Governance Institute (ECGI)

Brian Tayan

Stanford University - Graduate School of Business

Date Written: August 11, 2016


Individual investors are active participants in the shareholder resolution process, filing approximately one quarter of the total number of shareholder resolutions voted on each year. Their activism, however, is controversial. Critics contend that the large number of resolutions filed each year waste corporate resources and shareholder attention. Defenders respond that every shareholder is a legitimate participant in corporate governance and that shareholder resolutions are an important means of exercising voting and economic rights to improve corporate outcomes.

In this Closer Look, we examine the topic of individual shareholder activism in detail. We ask:

• Are individual activists harbingers of important new ideas or a strain on corporate resources? • To what extent should shareholders actively participate in corporate policy? To what extent should they defer to the judgment of directors? • How much “shareholder democracy” is the right amount? • Should SEC rules governing shareholder resolutions be adjusted?

The Stanford Closer Look series is a collection of short case studies through which we explore topics, issues, and controversies in corporate governance and executive leadership. In each study, we take a targeted look at a specific issue that is relevant to the current debate on governance and explain why it is so important. Larcker and Tayan are co-authors of the books Corporate Governance Matters and A Real Look at Real World Corporate Governance.

Keywords: Proxy voting, shareholder resolutions, Rule 14a-8, activists, activism, shareholder activism, board of directors, annual meeting, corporate governance research

JEL Classification: G3, G30, G34,

Suggested Citation

Larcker, David F. and Tayan, Brian, Gadflies at the Gate: Why Do Individual Investors Sponsor Shareholder Resolutions? (August 11, 2016). Rock Center for Corporate Governance at Stanford University Closer Look Series: Topics, Issues and Controversies in Corporate Governance No. CGRP-59, Available at SSRN:

David F. Larcker (Contact Author)

Stanford Graduate School of Business ( email )

Graduate School of Business
518 Memorial Way
Stanford, CA 94305-5015
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650-725-6159 (Phone)

Stanford University - Hoover Institution ( email )

Stanford, CA 94305
United States

European Corporate Governance Institute (ECGI) ( email )

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

Brian Tayan

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

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