What is shareholder activism
Subject: Management | Topics:

Mechanisms are designed with respect to efforts intended to improve the performance of boards of directors. A second and more positive reason for this interest is that evidence suggests that a well functioning corporate governance and control system can create a competitive advantage for an individual firm. For example, one governance mechanism the board of directors has been suggested to be rapidly evolving into a major strategic force in U.S. business firms. Thus, we describe actions designed to implement strategies that focus on monitoring and controlling mechanisms, which can help to ensure that top-level managerial actions contribute to the firm’s strategic competitiveness and its ability to earn above-average returns.

The active involvement of stockholders in their organization is shareholder activism. Active participation in company meetings is a healthy practice. Shareholders can ensure that the company follows good corporate governance practices and implements beneficial policies. They can resolve issues laid down in the annual and other general meetings. They can also raise concerns over financial matters or even social causes such as protection of the environment.

Shareholder activists include public pension funds, mutual funds, un ions, religious institutions, universities, foundations, environmental activists and human rights groups.

Shareholder Activism is the process of dialogue with company executives and filing shareholder resolutions generates investor pressure on corporate executives, garners media attention (which adds even more pressure on corporations to improve their behavior), and educates the public on often-ignored social, environmental, and labor issues. The process has served as a powerful tool to encourage corporate turnaround in social and environmental policies. Ultimately, this can lead to a more sustainable company.

What is shareholder activism

Related Management Paper: