Shareholder-Manager Contracts in Public Companies

54 Pages Posted: 3 Oct 2017 Last revised: 9 Apr 2018

Jordan Schoenfeld

Georgetown University, McDonough School of Business

Date Written: March 30, 2018


Shareholders in public firms are commonly assumed to be these firms' residual claimants, that is, agents without contractual claims against the firm. I find that in practice this is not the case for all shareholders. Many large shareholders and managers write binding bilateral shareholder agreement contracts (SACs) that can specify clauses pertaining to financing, trading, directorships, dividends, joint ventures, and private information sharing. From 1996 to 2015, 1,637 of the 18,927 large-percentage block investments in my sample involve SACs, and the use of SACs more than doubles over this period. SACs are also more prevalent in firms with increased shareholder-manager agency conflicts, which suggests that SACs arise in part to address these conflicts. Overall, I conclude that SACs have important but understudied effects on shareholders' and managers' action spaces.

Keywords: Corporate Governance, Financial Contracting, Shareholder Agreements

JEL Classification: D21, G30, G32, G34, K22, L22

Suggested Citation

Schoenfeld, Jordan, Shareholder-Manager Contracts in Public Companies (March 30, 2018). Available at SSRN: or

Jordan Schoenfeld (Contact Author)

Georgetown University, McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

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