Meme Corporate Governance

52 Pages Posted: 7 Feb 2023 Last revised: 9 May 2023

See all articles by Dhruv Aggarwal

Dhruv Aggarwal

Yale University, School of Management

Albert H. Choi

University of Michigan Law School; European Corporate Governance Institute (ECGI)

Yoon-Ho Alex Lee

Northwestern Pritzker School of Law

Date Written: April 29, 2023


Can retail investors revolutionize corporate governance and make public companies more responsive to social concerns? The U.S. stock market offered an unusual experiment to test the impact of retail investors in 2021, when there was a dramatic influx of retail investors into the shareholder base of companies such as GameStop and AMC. The meme surge phenomenon elicited a variety of reactions from scholars and practitioners. While some worried that affected companies’ share prices were becoming disjointed from their financial fundamentals, others predicted that retail shareholders will reduce the power of large institutional investors and democratize corporate governance. This Article presents the first empirical analysis of the impact of retail investors on the governance of companies affected by the “meme stock surge.” The Article presents three principal findings. First, we show how the “meme stock” frenzy was affected by the introduction of the commission-free trading platform, such as Robinhood, in 2019. We show that the meme stock companies experienced higher abnormal stock returns when commission-free trading was widely introduced, and saw elevated trading volumes afterward. Second, we examine how the influx of retail shareholders has directly affected the governance outcomes at the meme stock companies. Notwithstanding the promise of a more active retail shareholder base, we show that meme stock companies have experienced a significant decrease in participation by their shareholders with respect to voting. Shareholder proposals under Rule 14a-8 have also been extremely limited, with most meme firms seeing no proposals brought after the rapid increase in retail ownership. Third, we examine whether the increase in retail shareholder base had any indirect effect on corporate governance and performance. While board gender diversity at these firms is broadly unchanged, their ESG scores have gotten worse subsequent to the meme surge. Examining meme firms’ use of corporate funds, we find decreases in research and development and capital expenditures after the meme surge. Collectively, our findings suggest that the influx of retail shareholders at these companies have not translated into more “democratic” governance regimes or reduced agency costs, even at firms the scholarly and popular commentary had highlighted as the cynosure of the retail investor storm.

Keywords: Meme Stock, Retail Investors, Corporate Governance, Shareholder Voting, ESG

Suggested Citation

Aggarwal, Dhruv and Choi, Albert H. and Lee, Yoon-Ho Alex, Meme Corporate Governance (April 29, 2023). U of Michigan Law & Econ Research Paper 23-009, European Corporate Governance Institute - Law Working Paper No. 681/2023, Northwestern Public Law Research Paper No. 23-17, Available at SSRN: or

Dhruv Aggarwal

Yale University, School of Management ( email )

New Haven, CT
United States

Albert H. Choi (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States


European Corporate Governance Institute (ECGI) ( email )

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


Yoon-Ho Alex Lee

Northwestern Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States
(312) 503-2565 (Phone)

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