Shareholder Activism and Corporate Governance in the United States

As published in The New Palgrave Dictionary of Economics and the Law, vol. 3, pp. 459-465, 1998

20 Pages Posted: 5 Dec 1997  

Abstract

I survey corporate governance activity by institutional investors in the United States, and the empirical evidence on whether this activity affects firm performance. A small number of American institutional investors, mostly public pension plans, spend a trivial amount of money on overt activism efforts. They don't conduct proxy fights, and don't try to elect their own candidates to the board of directors. Legal rules, agency costs within the institutions, information costs, collective action problems, and limited institutional competence are all plausible partial explanations for this relative lack of activity. The currently available evidence, taken as a whole, is consistent with the proposition that the institutions achieve the effects on firm performance that one might expect from this level of effort -- namely, not much.

JEL Classification: G32, K22

Suggested Citation

Black, Bernard S., Shareholder Activism and Corporate Governance in the United States. As published in The New Palgrave Dictionary of Economics and the Law, vol. 3, pp. 459-465, 1998 . Available at SSRN: https://ssrn.com/abstract=45100 or http://dx.doi.org/10.2139/ssrn.45100

Bernard S. Black (Contact Author)

Northwestern University - Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States
312-503-2784 (Phone)

Northwestern University - Kellogg School of Management

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-5049 (Phone)

European Corporate Governance Institute (ECGI)

Brussels
Belgium

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