The Costs and Benefits of Shareholder Democracy

Mariassunta Giannetti and Nickolay Gantchev

No 13358, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We show that while low-cost shareholder activism via shareholder-sponsored proposals is occasionally value-enhancing, many proposals are submitted by the same few individual investors and other sponsors without organizational capabilities to analyze a large number of firms. These proposals if approved and subsequently implemented appear to destroy shareholder value. We show that firms whose shareholders are more likely to collect information before voting benefit from low-cost shareholder activism because these investors weed out low-quality proposals. We conclude that an informed shareholder base is crucial for firms to take advantage of low-cost shareholder activism.

Keywords: Shareholder activism; Shareholder proposals; Shareholder voting; Corporate governance (search for similar items in EconPapers)
JEL-codes: D72 G3 (search for similar items in EconPapers)
Date: 2018-12
New Economics Papers: this item is included in nep-cdm
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://cepr.org/publications/DP13358 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:13358

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP13358

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().