Shareholder Activism among Portfolio Managers: Rational Decisions or 15 Minutes of Fame?

25 Pages Posted: 7 Jun 2007 Last revised: 19 May 2008

See all articles by Lars L. Norden

Lars L. Norden

Stockholm University - Stockholm Business School

Therese Strand

Copenhagen Business School, Center for Corporate Governance

Date Written: May 18, 2008

Abstract

This paper investigates shareholder activism by observing Swedish portfolio managers' behavior at firms' annual general meetings. Institutional shareholders' voting behavior and tendencies for raising opinions at the general meetings are related to firm characteristics, suggested by both agency theory and institutional perspectives. The results show that institutional shareholders are more likely to be active in large firms, which appear a lot in media, and have a large proportion of institutional ownership. Portfolio managers appear not to consider bad firm performance as a reason for targeting firms. Instead, managers' behavior is consistent with the institutional notion that they benefit from the activism themselves, without trying to improve target firms' performance. In view of this notion, it is rational for managers to be active in large firms, with large media coverage, achieving their 15 minutes of fame at the general meetings.

Keywords: Institutional shareholder activism,Target firms, Agency theory, Institutional theory

JEL Classification: D80, D82, G23, G34, K22

Suggested Citation

Nordén, Lars L. and Strand, Therese, Shareholder Activism among Portfolio Managers: Rational Decisions or 15 Minutes of Fame? (May 18, 2008). Available at SSRN: https://ssrn.com/abstract=991542 or http://dx.doi.org/10.2139/ssrn.991542

Lars L. Nordén (Contact Author)

Stockholm University - Stockholm Business School ( email )

Sweden

Therese Strand

Copenhagen Business School, Center for Corporate Governance ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

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