Incentives to Corporate Governance Activism

Dennis Leech

No 133, Royal Economic Society Annual Conference 2003 from Royal Economic Society

Abstract: This paper considers incentives faced by investors (financial institutions) to become actively involved in the governance of under-performing companies in their portfolio as recently proposed. By considering the private benefits and the costs of investor activism separately, it questions the conventional wisdom -based on simplistic agency theory - that share ownership is so widely held in the UK that such incentives are too weak for shareholder activism to be a rational basis of a system of corporate governance. It finds that in many cases, by contrast, these incentives would be very strong indeed if conflicts of interest could be avoided.

Keywords: Corporate governance; shareholder activism; incentives; free-rider problem; agency (search for similar items in EconPapers)
JEL-codes: G20 G34 L21 (search for similar items in EconPapers)
Date: 2003-06-04
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ecj:ac2003:133

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