Contracts Between Firms and Shareholders

Journal of Accounting Research, Forthcoming

56 Pages Posted: 3 Oct 2017 Last revised: 20 Mar 2020

Multiple version iconThere are 2 versions of this paper

Date Written: January 10, 2020


Theory predicts the existence of explicit bilateral contracts between firms and expert shareholders. I assemble and analyze a large-scale data set of these contracts. Using block investments from 1996 to 2018, I find that these contracts involve mainly corporate owners and activist owners, and often specify covenants pertaining to financing, trading, directorships, dividends, joint ventures, corporate investment, financial reporting, and information access. I also find that some of the contract covenants are stated in terms of accounting information, and that the prevalence of these contracts is significantly positively associated with measures of information asymmetry between managers and shareholders. Overall, this study provides some of the first systematic evidence on explicit bilateral contracts between firms and shareholders.

Keywords: Agency Problems; Corporate Governance; Shareholder Contracts

JEL Classification: G32, G34, K22, L22

Suggested Citation

Schoenfeld, Jordan, Contracts Between Firms and Shareholders (January 10, 2020). Journal of Accounting Research, Forthcoming, Available at SSRN: or

Jordan Schoenfeld (Contact Author)

University of Utah ( email )

1645 E. Campus Center
Salt Lake City, UT 84112
United States

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