Shareholder activism: a driver or an obstacle to sustainable value creation?

24 Pages Posted: 18 Mar 2021

See all articles by Jukka Mähönen

Jukka Mähönen

University of Oslo - Faculty of Law; University of Helsinki - Faculty of Law

Date Written: March 16, 2021


Shareholder activism has a controversial history. During the last decade, the discussion has concentrated on activist hedge funds, some seeing them as agents for passive shareholders, bridging the separation of ownership and control (Bebchuk et al 2015), others believing their short-term value-maximization interests differing fundamentally from those of other institutional shareholders (Lipton 2013). Others have seen hopes for long-term activism in other institutional shareholders like pension funds.

Activist advocates demand institutional investors should be granted wider competences under corporate governance. Those criticizing especially hedge funds of their short-termism have demanded even wider competences to the board to defend the company’s long-term value. In the European Union, activism is seen positively, encouraging the European Commission to give proposals to enhance shareholders’ rights against the boards’ discretion.

The purpose of this chapter is to focus on the activism of institutional investors and the impact of that activism on both the target productive companies and their ultimate beneficiaries, and how they could be incentivised to more sustainable behaviour in their activism. The focus is on the European Union. However, the markets for institutional investors are global. A broader perspective including, for example, North America and Asia is therefore taken. The most important impact of institutional activism is arguably normative, causing changes in corporate governance. Specific attention is therefore given to governance questions.

Keywords: company; shareholders; activism; shareholder activism; institutional investors; corporate governance; European Union

Suggested Citation

Mähönen, Jukka T, Shareholder activism: a driver or an obstacle to sustainable value creation? (March 16, 2021). University of Oslo Faculty of Law Research Paper No. 2021-06, Available at SSRN:

Jukka T Mähönen (Contact Author)

University of Oslo - Faculty of Law ( email )

Karl Johansgt 47
N-0162, Oslo
+4722859534 (Phone)


University of Helsinki - Faculty of Law ( email )

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P.O. Box 4
Helsinki, FIN-0001 4

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