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Introduction:Shareholder activism comprises a range of activities by public companies’ shareholders who desire some change in the corporation and intervene in the management’s decisions. The goals of activists are various. They may seek to change the company’s strategy, financial structure, management, or board in general. More specifically they may seek to change the capital allocation strategy (stock buybacks, dividends, or company’s acquisitions policies), the board composition, the company’s executive compensation plans, or the company’s certain functions (risk management, audit).

Purpose:The purpose of this literature review research study is to explore the concept of shareholder activism. According to a point of view, these activist actions stimulate better corporate governance practice in the companies and ultimately lead to an increase in the company’s stock price in the short term. The others claim that activism increases the company’s share price volatility in the long term. In the near future, the impact of shareholder activism will continue to rise and the ways how the companies respond to it is gaining importance. This study sheds light on the types of shareholder activism, when they are likely to approach a company and which tactics they most likely use.

Methodology:Considering the rapid expansion of shareholder activism concept in the world the author makes a review of literature on shareholder activism. The structure of this chapter is as follows. First, the characteristics of shareholder activism are introduced. Second, the theoretical background of this concept is given in detail. Third, the types of shareholder activism are discussed. Finally, the conclusion comprises a summary of shareholder activism.

Findings:The study finds out that shareholder activism has started to have a significant influence on corporate governance policy that a firm adopts in recent years. Shareholder activism increases levels of shareholder engagement in firm decisions and fosters a long-term corporate governance culture. As institutional investors get a higher portion from global equity investments, their role in shareholder activism will increase. There are opinions suggesting that investor activism will lead to better corporate governance practices in firms, leading to an increase in firm share prices in the short term. The shareholder activism phenomenon seems to be on the agenda of all companies in the near future.

This chapter investigates the short-run and long-run economic implications of the shareholder activism in family-controlled firms in Malaysia.

In order to investigate the impact of MSWG activism on RPT, we collected related party transactions data (sales and purchases) and inter-segment sales from the annual reports of the firms. We use standard event study methodology to calculate abnormal returns for the sample and control firms.

We do not find significant effect on the share performance in the short-run after MSWG engagement with the targeted firms. However in the long-run, our results show significant improvement in the MSWG targeted family-controlled firms’ performance compared to non-targeted family firms. We also examine the changes in the level of related party transactions. We do not find significant changes in the level of such sales and purchase transactions except for inter-segment sales.

We argue that market is not strong form efficient because market did not react to the MSWG engagement with the management of these companies. We propose that future research should focus on the investors perception of the MSWG involvement so that a clear picture of its significance can be observable to other firms in the market.

Even though the activism practices are still less aggressive in Malaysia than those found in the developed countries such as the United Kingdom and the United States, however our results show that shareholder activism led by MSWG have impact on the family-owned firms performance in the long-run.

We argue that it is the first study to examine MSWG engagements with the family-controlled firms in Malaysia.

Purpose – This chapter presents the results of an exploratory study carried out on activist institutional investor strategies. It aims to identify the way in which different types of institutional investors are reacting to new institutional pressures in the French context.

Design/methodology/approach – Our methodology is based on a series of semi-directive interviews, combined with additional relevant data.

Findings – The interpretation of results makes use of institutional theory, more specifically the work of Oliver (1991). Our study shows that active institutional investors may opt for different responses when confronted with new institutional pressures, and that these responses would seem to depend on antecedents underlined by Ryan and Schneider (2002), which in turn depend on the nature of their business relationships with the firm in which they invest. Whereas pressure-sensitive investors (such as banks and insurance companies) generally adopt acquiescence responses, pressure-resistant investors (such as pension funds and investment funds) pursue joint strategies of co-optation, influence or control with key actors such as local and international proxy advisors and French investor associations. Acting conjointly, certain pressure-resistant investors are often considered as institutional entrepreneurs in that they initiate changes and actively participate in the implementation of new norms in the field of shareholder activism in the French context. In parallel to this ongoing professionalization, other pressure-resistant investors such as activist hedge funds seem to lack sufficient legitimate power to be effective.

Originality/value – This chapter illustrates that the level of institutional investor activism depends largely on the relevant national legal framework. It also shows how institutional investor coalitions take advantage of new institutional pressures to enhance their legitimacy or increase the effectiveness of their action.

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.

Previous work has shown that corporate social responsibility (CSR) initiatives can preserve shareholder value after an organization experiences a negative event. I expand on this theory by examining one boundary condition that could lead to the opposite relationship: when the organization has a CSR initiative intended to prevent the type of event that occurs. The author argues that activist pressure will enhance the negative relationship between event-specific CSR and shareholder value. Using an event-study, the author examines the apparel industry after the collapse of Rana Plaza which killed over a thousand apparel supply chain employees.

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.

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.