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In this part of the book, we investigate the practical characteristics of AGMs in an extensive empirical analysis. For this, we consider the turnout rates of AGMs of seven European Member States between 2010 and 2014 in this chapter. We show that, although there are large differences in total and small shareholder turnout rates among Member States, there is an overall increasing trend in the 2010–2014 period. In contrast to what economic theory predicts, a substantial and increasing part of small shareholders actually participate in AGMs.

This chapter investigates which factors contribute to (small) shareholder attendance using a hand-collected panel data set with information about turnout rates, voting behaviour and ownership structures of companies that are listed in seven Member States. We document how ownership concentration positively affects total shareholder turnout, but has a negative effect on small shareholder turnout. Voting power also affects small shareholder turnout rates; the greater small shareholder voting power, the greater their eagerness to vote. In addition, total and small shareholder turnout is higher the more important the meeting agenda. And, small shareholders tend to free-ride on large institutional shareholders and corporate insiders, but the magnitude of the free-rider effect is larger for the latter category of blockholders. Our results provide some important insights for the debate on shareholder rights and the role of the AGM in corporate governance. The results show that, despite the criticism, the AGM still plays an important role in small shareholder monitoring. Some topics seem to clearly motivate small shareholders to attend, while others are less relevant. Policy makers can stimulate shareholder monitoring by focusing on the factors that are determined in this study, but it is important to consider possible endogeneity issues as well.

In this part of the research, we consider the costs of the turnout decision and evaluate whether the introduction of the Shareholder Rights Directive (2007/36/EC), which aimed at lowering voting costs, has had a positive impact on (small) shareholder attendance. For this, we investigate turnout rates in Belgium, France and the Netherlands. We find strong indications that the Shareholder Rights Directive indeed had a positive impact on (small) shareholder attendance in these countries. The findings of this study may encourage policy makers to further reduce the costs of (cross-border) voting. It shows that the introduction of the new Shareholder Rights Directive may contribute to (small) shareholder engagement.

Blockholders can behave opportunistically because small shareholder voting suffers from coordination problems. In this chapter, we investigate the features of small shareholder voting using a theoretical framework. Specifically, we investigate when defeating a blockholder’s resolution is optional for shareholders. Regulatory initiatives that facilitate communication between small shareholders or focus on institutional investors and corporate governance tools that alter or add the threshold in the voting game also contribute to solving the coordination problem. These corporate governance initiatives can increase the relevance of AGMs in Europe.

From a theoretical agency perspective, the Annual General Meeting of Shareholders (‘AGM’) is an important corporate law solution for mitigating agency problems between shareholders and managers in large public corporations. At the AGM, shareholders are informed, they are offered a venue to discuss and ask questions, and they are involved in decision-making. Despite these theoretical important functions, the AGM is largely criticized in practice. Criticism contains, for example, rational apathy and free-rider behaviour that lead to low shareholder turnout, a lack of (meaningful) dialogue and side-stepping behaviour. Yet, fundamental empirical research on the AGM in practice is lacking, which makes this book highly relevant. This chapter provides the outline of the research that is conducted in this book.

In the previous chapters of this part, we considered voter turnout, ownership concentration and voting behaviour of shareholders. In this chapter, we take a closer look at the types of shareholders that are present in our data set. We define five different types of shareholders and evaluate their stakes. Afterwards, we consider outsider shareholder voting behaviour and find that, when only considering these shareholders, dissent rates are significantly higher. These findings imply that it may be desirable for continental European countries to consider a rule like UK Listing Rules 9.2.2AR to ER.

In this chapter, we are among the first to investigate the actual course of affairs in AGMs with respect to shareholder forum rights. In the first part of the chapter, we provide descriptive statistics on the use of the right to ask questions and speak in AGMs in the Netherlands. We find that in an average meeting there are around 42 questions and remarks made by around 8 shareholders. Most of these questions and remarks seem to be relevant; with a categorization framework of 14 topics, we could already identify over 50% of these questions and remarks. However, we also find that the average number of shareholders that physically ask questions is only 8. Next, we consider the determinants of the use of these forum rights. In several panel data analyses with a Poisson distribution and a negative binomial distribution, we, inter alia, found that the ‘importance of the meeting’ generally contributes to the amount of questions and remarks and the number of shareholders that actively engage in discussions. We have also found that the number of speakers – and the number of private investors – that actively attend the AGM depends on previous attendance numbers. This may imply that there is a small base of very active (private) investors in the Netherlands. We conclude that the forum function of AGMs is definitely relevant, but given the low number of shareholders that make use of these rights, amendments may be considered.

In this chapter, we assess the ownership characteristics for the companies in our sample. For this, we do not only use ownership concentration measures such as the Herfindahl–Hirschman index but also voting power measures since ownership and voting power are not necessarily equivalent. We find that, in line with previous studies, ownership concentration and voting power of large shareholders is generally higher in continental European countries, which has important implications for corporate governance.