Shareholder Democracy and Shareholder Activism

2019 ◽  
pp. 35-52
Author(s):  
Anita Indira Anand
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Hedge Fund ◽  
Shareholder Activism ◽  
Institutional Investor ◽  
Corporate Law ◽  
Important Concept ◽  
Shareholder Democracy ◽  
Significant Block ◽  
Advocacy Role

This chapter examines shareholder-driven corporate governance (SCG) through the twin concepts of shareholder democracy and shareholder activism. Taken together, these concepts are the vehicle through which SCG takes effect in practice. The term activist investor describes an institutional investor that seeks value-enhancing changes in the leadership, governance, capital structure, or strategy and operations of a corporation in which it is invested. There are two basic types of activism: offensive activism, in which a hedge fund takes over a poorly performing firm and then reforms it to enhance its performance; and defensive activism, in which the activist institution takes on an advocacy role when it is unhappy with a corporation of which it already holds a significant block. Meanwhile, shareholder democracy refers to the ability of shareholders to influence the corporation through their votes. It is an important concept in corporate law, one that underpins the legitimacy of shareholder activism.

scholarly journals Earnings management and internal mechanisms of corporate governance: Empirical evidence from Chilean firms

2005 ◽  
Vol 3 (1) ◽  
pp. 17-29 ◽  
Author(s):  
Félix J. López-Iturriaga ◽  
Paolo Saona Hoffmann
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Earnings Management ◽  
Empirical Evidence ◽  
Ownership Structure ◽  
Institutional Investor ◽  
Ownership Concentration ◽  
Discretionary Power ◽  
Abnormal Accruals ◽  
Discretionary Behavior

We analyze the ability of the capital structure and the ownership structure as mechanisms of control of the managers of the firms and to reduce their accounting discretionary power for a sample of Chilean firms. Using earnings management and abnormal accruals as indicators of discretionary behavior, our results show that both debt and ownership concentration reduce the managers’ discretionary behavior, so we corroborate the outstanding role both mechanisms play in a country with low protection of investors’ rights. At the same time, we find that earnings management is fostered by institutional investor ownership

Shareholder activism in Indonesia: revisiting shareholder rights implementation and future challenges

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ulya Yasmine Prisandani
Keyword(s):  
Corporate Governance ◽  
Shareholder Activism ◽  
Legal Framework ◽  
Corporate Law ◽  
Minority Shareholders ◽  
Empirical Observation ◽  
Content Type ◽  
Shareholder Protection ◽  
Future Challenges ◽  
Laws And Regulations

Purpose This paper aims to elaborate on the extent to which the Indonesian legal framework has provided room for shareholder activism and the extent to which shareholder activism has been implemented in Indonesia. Design/methodology/approach This study combines normative and empirical legal research methods. Indonesian laws and regulations are analyzed aside from the analysis of empirical data and court decisions on shareholder activism implementation. Findings Indonesian laws and regulations have accommodated shareholders’ activism and shareholders have started to rectify mismanagement and abuse of power that causes loss to the company through derivative lawsuits. Despite this, Indonesian shareholders are still passive, shown by the number of questions asked in the general meetings of shareholders despite the high attendance percentage. Shareholders have also formed associations to gather more influence on the company’s decision-making process. Research limitations/implications The empirical observation in this study was limited to LQ45 companies of the February to July 2021 period. This study can be useful to improve corporate governance and corporate communication in a company to encourage higher participation of individual/minority shareholders. This study also serves as an extension to numerous studies on shareholder protection, corporate governance and corporate law in Indonesia. Originality/value Study on shareholder activism in Indonesia is still rare, despite the rising urgency of company supervision and monitoring to prevent mismanagement. To fill in that gap, this research hopes to initiate discussion on shareholder activism in relation to shareholder protection, corporate governance and corporate law implementation.

The evolution and alignment of institutional shareholder engagement through the King and CRISA reports

2020 ◽  
Vol 11 (2) ◽  
pp. 147-153
Author(s):  
Richard Foster
Keyword(s):  
South Africa ◽  
Corporate Governance ◽  
Institutional Investors ◽  
Shareholder Activism ◽  
Institutional Investor ◽  
Historical Narrative ◽  
Content Type ◽  
Shareholder Engagement ◽  
On The Road ◽  
High Level

Purpose The purpose of this study is to provide a high-level review of the evolution of shareholder activism and institutional investor engagement in the corporate governance ecosystem in South Africa. Furthermore, it specifically seeks to explain the incorporation of such aspects into the various key codes and reports on corporate governance in South Africa since 1994. Design/methodology/approach Historical narrative and analysis. Findings This study highlights how shareholder activism and institutional investor engagement in the corporate governance ecosystem have been considered and addressed in South Africa since the publication of the First King Report in 1994. The progress that has been made specifically with regard to the introduction of a code for institutional investors is highlighted. The study ultimately acknowledges that this evolution is a continuing journey on the road to stakeholder inclusivity and engagement, and then concludes that the specific role and impact of institutional investors, particularly given some of the recent corporate governance failures, will require further consideration going forward. This should ensure the continued alignment of all stakeholders and assist in making the necessary improvements to the overarching governance framework and attendant culture. Originality/value This study is a part of a special issue that looks at the contribution of the King reports to governance globally.

Shareholder Activism

2015 ◽  
Author(s):  
Wolf-Georg Ringe
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Hedge Fund ◽  
Shareholder Activism ◽  
Regulatory Constraints ◽  
Shareholder Structure ◽  
Historical Developments ◽  
The Global Financial Crisis ◽  
The Impact

This chapter examines the phenomenon of shareholder activism within the context of corporate governance and its place in today’s debate on shareholders and shareholder empowerment. It first reviews the concept of shareholder activism and emphasizes the importance of the shareholder structure under which it operates before turning to the historical developments of shareholder activism, with particular emphasis on the U.K., US, and continental Europe. It then describes the various methods employed by activist shareholders and the corresponding regulatory constraints. It also discusses the impact of the global financial crisis of 2007–2011 on shareholder activism. The chapter suggests that shareholder activism has been enjoying something of a renaissance lately, with hedge fund activism becoming more refined, as well as a surge in success following the global financial crisis.

Responsible Ownership, Shareholder Value and the New Shareholder Activism

2007 ◽  
Vol 11 (3) ◽  
pp. 223-240 ◽  
Author(s):  
John Hendry ◽  
Paul Sanderson ◽  
Richard Barker ◽  
John Roberts
Keyword(s):  
Corporate Governance ◽  
Driving Force ◽  
Shareholder Value ◽  
Shareholder Activism ◽  
Institutional Investor ◽  
Current Situation ◽  
Interview Data ◽  
Regulatory Changes ◽  
Responsible Ownership ◽  
Profit Maximisation

In this paper we use interview data to explore the ‘new shareholder activism’ of mainstream UK institutional investor We describe contemporary practices of corporate governance monitoring and engagement and how they vary across institutions, and explore the motivations behind them Existing studies of shareholder activism mainly assume that it is motivated by a desire to maximize shareholder value, and we find some evidence both of this and of alternative political/moral motivations related to ideas of responsible ownership We conclude, however, that in the current situation both these act primarily as rationalizations rather than as genuine motivators The main driving force behind the new shareholder activism is the institutions' own profit maximisation and the need to position themselves against competitor institutions in the context of political and regulatory changes that have significantly changed the non-financial expectations of their clients.

The Effects of Capital Structure and Good Corporate Governance on Company Value

2020 ◽  
Vol 24 (02) ◽  
pp. 3002-3011
Author(s):  
Eristy Minda Utami ◽  
Fani Nuryani ◽  
Deden Novan Setiawan Nugraha
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Company Value ◽  
Good Corporate Governance
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