Speaking With One Voice: Shareholder Collaboration on Activism

50 Pages Posted: 13 May 2020 Last revised: 24 Aug 2021

See all articles by Shaoting Pi

Shaoting Pi

University of Utah - Department of Finance

Date Written: May 8, 2020

Abstract

Shareholder collaboration is critical for corporate governance. Developing a game-theoretic model, I analyze how an activist shareholder with small stakes organizes shareholder collaboration to govern a firm via intervention. The small activist must afford activism costs and win over passive shareholders simultaneously. By persuading fellow active shareholders to collaborate, the small activist can spread activism costs. However, collaborating with fellow active shareholders can jeopardize passive shareholders’ support. The interplay between collaborating with fellow active shareholders and winning over passive shareholders endogenizes the boundary of shareholder collaboration. Potential shareholder collaboration makes boards more likely to settle with activists before proxy fights.

Keywords: Collaboration, Shareholder Activism, Institutional Shareholders, Communication

JEL Classification: G34, D83, G23

Suggested Citation

Pi, Shaoting, Speaking With One Voice: Shareholder Collaboration on Activism (May 8, 2020). Available at SSRN: https://ssrn.com/abstract=3599237 or http://dx.doi.org/10.2139/ssrn.3599237

Shaoting Pi (Contact Author)

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States

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

Paper statistics

Downloads
116
Abstract Views
1,383
rank
294,084
PlumX Metrics