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Shareholder Activism (shareholder + activism)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting83%

Selected Abstracts

Antecedents of Shareholder Activism in Target Firms: Evidence from a Multi-Country Study

CORPORATE GOVERNANCE, Issue 4 2010
William Q. Judge
ABSTRACT Manuscript Type: Empirical Research Question/Issue: This study seeks to better understand the antecedents of shareholder activism targeted at firms located in three common law countries (i.e., USA, UK, and Australia) and three civil law countries (Japan, Germany, and South Korea) during the 2003,07 time period. Research Findings/Insights: Our findings suggest that the antecedents of shareholder activism vary by the motivation of the activist. We demonstrate that activists target firms with two motives (a) to improve the financial performance, and (b) to improve the social performance of the firm. With respect to the target firm level antecedents, we find that firm size is unrelated to financial activism, but positively related to social activism; ownership concentration is negatively related to both financial and social activism; and prior profitability is negatively related to financial activism, but positively related to social activism. Further, these relationships in the case of financial activism are generally stronger in common law legal systems, whereas those in the case of social activism are generally stronger in environments with a greater level of income inequality. Theoretical/Academic Implications: Our findings suggest that future research should differentiate between the motivations of the activism event. Further, we find that while agency logic works well for financial activism, institutional theory provides stronger explanations for social activism. Overall, we demonstrate the complementary nature of these two theories in explaining shareholder activism. Practitioner/Policy Implications: We found that the "exposure" to shareholder activism varies by the motivation of the activist, and the nature of the firm and its national context. An understanding of these issues would help firms develop proper response strategies to activism events. [source]

Shareholder Activism: Corporate Governance Reform in Korea , By Han-Kyun Rho

CORPORATE GOVERNANCE, Issue 6 2007
Woochan Kim
No abstract is available for this article. [source]

London Business School Roundtable on Shareholder Activism in the U.K.

JOURNAL OF APPLIED CORPORATE FINANCE, Issue 2 2006
Article first published online: 16 JUN 200
Finance scholars have produced little evidence of the effectiveness of direct attempts by institutional shareholders to improve corporate performance. What studies we have,focused mainly on the activities of U.S. pension funds,show no clear effect on shareholder returns. But a new study of shareholder activism in the U.K. looks promising. The subject of the study is a "Focus Fund," launched in 1998 by the U.K. investment firm Hermes, whose aim is to identify underperforming companies, propose changes to their managements and boards, and,in contrast to the practices of the best-known U.S. shareholder activists,work mainly "behind the scenes" with the companies to bring about those changes. In keeping with the more private nature of U.K. activism, which reflects in part the fewer restrictions on communication between companies and their investors than in the U S., the study's method of investigation is also notably different from the methods used in studies of U.S. investors. Four academics were allowed to examine Hermes' records of its "engagements" with companies, including letters, recordings and transcripts of telephone conversations, and the staff's personal notes and recollections. Using this information, the researchers show that the Fund has been remarkably successful in bringing about three kinds of proposed changes: replacements of CEOs and Chairmen; changes in investment and financial policies (mainly increased payouts and more disciplined capital spending); and restructurings (typically leading to greater corporate focus). Of equal importance, the study also shows that the market reaction to the announcement of such changes has been significantly positive, and that the cumulative effect of these positive reactions accounts for as much as 90% of the Fund's impressive "alpha," or market out-performance, over its eight-year life. The first public presentation of these findings took place on February 9 at the inaugural event of the London Business School's Center for the Study of Corporate Governance. In our account of the event, an overview of the study's findings by two of its authors is followed by an "insider's" view of the Hermes' success story (presented by the Chief Executive of the Fund from 2002,2004) and a panel discussion of the general import of the findings featuring four distinguished practitioners. [source]

Bringing About Changes to Corporate Social Policy through Shareholder Activism: Filers, Issues, Targets, and Success

BUSINESS AND SOCIETY REVIEW, Issue 2 2009
MIGUEL ROJAS
ABSTRACT We examine shareholder initiated social policy proposals' capacity to exert pressure on management to force it to adopt the suggested changes in policy. We show that social proposals, filed under the U.S. Securities and Exchange Commission's Rule 14a-8, have a more limited capacity to change corporate social policy than it has been previously reported. However, the capacity to exert pressure on firms can be substantially higher for some types of filers, notably pension funds and mutual funds. The analysis also suggests that the capacity to influence management is higher for some types of issues presented in the resolution, such as those related to board diversity, energy and environment, and international laborand human rights. We also provide suggestions explaining why shareholder activism is a persistent practice despite its limited results. [source]

Fad and Fashion in Shareholder Activism: The Landscape of Shareholder Resolutions, 1988,1998

BUSINESS AND SOCIETY REVIEW, Issue 4 2001
Samuel B. Graves
[source]

Antecedents of Shareholder Activism in Target Firms: Evidence from a Multi-Country Study

CORPORATE GOVERNANCE, Issue 4 2010
William Q. Judge
ABSTRACT Manuscript Type: Empirical Research Question/Issue: This study seeks to better understand the antecedents of shareholder activism targeted at firms located in three common law countries (i.e., USA, UK, and Australia) and three civil law countries (Japan, Germany, and South Korea) during the 2003,07 time period. Research Findings/Insights: Our findings suggest that the antecedents of shareholder activism vary by the motivation of the activist. We demonstrate that activists target firms with two motives (a) to improve the financial performance, and (b) to improve the social performance of the firm. With respect to the target firm level antecedents, we find that firm size is unrelated to financial activism, but positively related to social activism; ownership concentration is negatively related to both financial and social activism; and prior profitability is negatively related to financial activism, but positively related to social activism. Further, these relationships in the case of financial activism are generally stronger in common law legal systems, whereas those in the case of social activism are generally stronger in environments with a greater level of income inequality. Theoretical/Academic Implications: Our findings suggest that future research should differentiate between the motivations of the activism event. Further, we find that while agency logic works well for financial activism, institutional theory provides stronger explanations for social activism. Overall, we demonstrate the complementary nature of these two theories in explaining shareholder activism. Practitioner/Policy Implications: We found that the "exposure" to shareholder activism varies by the motivation of the activist, and the nature of the firm and its national context. An understanding of these issues would help firms develop proper response strategies to activism events. [source]

Role of corporate governance in mitigating the selective disclosure of executive stock option information

ACCOUNTING & FINANCE, Issue 3 2010
Jodie Nelson
M40; M41 Abstract We examine the nature and extent of statutory executive stock option disclosures by Australian listed companies over the 2001,2004 period, and the influence of corporate governance mechanisms on these disclosures. Our results show a progressive increase in overall compliance from 2001 to 2004. However, despite the improved compliance, the results reveal managements' continued reluctance to disclose more sensitive executive stock option information. Factors associated with good internal governance, including board independence, audit committee independence and effectiveness, and compensation committee independence and effectiveness are found to contribute to improved compliance. Similarly, certain external governance factors are associated with improved disclosure, including external auditor quality, shareholder activism (as proxied by companies identified as poor performers by the Australian Shareholders' Association) and regulatory intervention. [source]

London Business School Roundtable on Shareholder Activism in the U.K.

JOURNAL OF APPLIED CORPORATE FINANCE, Issue 2 2006
Article first published online: 16 JUN 200
Finance scholars have produced little evidence of the effectiveness of direct attempts by institutional shareholders to improve corporate performance. What studies we have,focused mainly on the activities of U.S. pension funds,show no clear effect on shareholder returns. But a new study of shareholder activism in the U.K. looks promising. The subject of the study is a "Focus Fund," launched in 1998 by the U.K. investment firm Hermes, whose aim is to identify underperforming companies, propose changes to their managements and boards, and,in contrast to the practices of the best-known U.S. shareholder activists,work mainly "behind the scenes" with the companies to bring about those changes. In keeping with the more private nature of U.K. activism, which reflects in part the fewer restrictions on communication between companies and their investors than in the U S., the study's method of investigation is also notably different from the methods used in studies of U.S. investors. Four academics were allowed to examine Hermes' records of its "engagements" with companies, including letters, recordings and transcripts of telephone conversations, and the staff's personal notes and recollections. Using this information, the researchers show that the Fund has been remarkably successful in bringing about three kinds of proposed changes: replacements of CEOs and Chairmen; changes in investment and financial policies (mainly increased payouts and more disciplined capital spending); and restructurings (typically leading to greater corporate focus). Of equal importance, the study also shows that the market reaction to the announcement of such changes has been significantly positive, and that the cumulative effect of these positive reactions accounts for as much as 90% of the Fund's impressive "alpha," or market out-performance, over its eight-year life. The first public presentation of these findings took place on February 9 at the inaugural event of the London Business School's Center for the Study of Corporate Governance. In our account of the event, an overview of the study's findings by two of its authors is followed by an "insider's" view of the Hermes' success story (presented by the Chief Executive of the Fund from 2002,2004) and a panel discussion of the general import of the findings featuring four distinguished practitioners. [source]

Internal and External Corporate Governance: An Interface between an Organization and its Environment

BRITISH JOURNAL OF MANAGEMENT, Issue 3 2010
Igor Filatotchev
Most corporate governance research focuses on a universal link between corporate governance practices (e.g. shareholder activism, board independence) and performance outcomes, but neglects how interdependences between the organization and diverse environments lead to variations in the effectiveness of different corporate governance practices. This paper develops an organizational approach to corporate governance and focuses on two dominant streams that analyse internal and external governance mechanisms. First, we explore governance practices aimed at dealing with a complex set of problems internal to an organization, such as conflicts of interest between managers and shareholders, different types of shareholders, and block-holder opportunism. Second, we discuss the importance of formal and informal governance arrangements that organizations use in managing their relationships with external parties, such as alliance partners, overseas subsidiaries and network members. We argue that an integrated approach bringing these two streams together helps to develop a more holistic view on the effectiveness and efficiency of various corporate governance mechanisms, and suggests a number of avenues for future research. This paper also sets the scene for this thematic issue on corporate governance, scopes the field and introduces 11 papers which make significant contributions towards our understanding of corporate governance. [source]

Bringing About Changes to Corporate Social Policy through Shareholder Activism: Filers, Issues, Targets, and Success

BUSINESS AND SOCIETY REVIEW, Issue 2 2009
MIGUEL ROJAS
ABSTRACT We examine shareholder initiated social policy proposals' capacity to exert pressure on management to force it to adopt the suggested changes in policy. We show that social proposals, filed under the U.S. Securities and Exchange Commission's Rule 14a-8, have a more limited capacity to change corporate social policy than it has been previously reported. However, the capacity to exert pressure on firms can be substantially higher for some types of filers, notably pension funds and mutual funds. The analysis also suggests that the capacity to influence management is higher for some types of issues presented in the resolution, such as those related to board diversity, energy and environment, and international laborand human rights. We also provide suggestions explaining why shareholder activism is a persistent practice despite its limited results. [source]

A new politics of engagement: shareholder activism for corporate social responsibility

BUSINESS STRATEGY AND THE ENVIRONMENT, Issue 4 2003
Anastasia O'Rourke
Shareholder groups are increasingly going beyond the decision to invest, not to invest, or to divest by proposing and voting on company specific corporate social responsibility (CSR) issues at annual shareholder meetings. This activity is joined by an increasingly sophisticated ,strategy of engagement' by both shareholders and companies. In the process, a model of investor capitalism based on ,responsible ownership' is being forged that addresses social and environmental issues previously outside the domain of most shareholders. This paper traces a historical perspective on the growth and spread of shareholder activism, describes the key actors currently involved in this activity, illustrates the CSR issues being raised, explains the process of preparing resolutions and entering into dialogue, assesses some of the results gained so far and lays a conceptual foundation to help analyse the effectiveness of shareholder activism and assess the viability of models of ,shareholder democracy'. Copyright © 2003 John Wiley & Sons, Ltd and ERP Environment. [source]