Xu, Sixiao (2019) Towards better corporate governance : a comparative study of shareholder activism in the US and the UK. PhD thesis, University of Warwick.

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Abstract

This thesis examines the efficiency of institutional shareholder activism in the US and the UK and puts forward legal reform to increase its efficiency. It argues that corporate constituencies participate in the company to mitigate others’ opportunism as a result of incomplete contracting. Thus the company’s objective should be total utility maximization and the efficiency of shareholder activism should be assessed by comparing its costs and benefits to the company. This thesis finds that in general the benefits of shareholder activism lie in its improvement to corporate governance. The costs include self-interested activism, myopic activism and negative externalities. But the efficiency of shareholder activism is also heavily influenced by firm-specific factors, such as competitiveness of the product market, innovativeness of the company’s business, corporate life stage and organizational structure.

This thesis finds that mainstream institutional shareholders have weak incentives to initiate activism. Hedge funds have strong incentives to initiate both beneficial and detrimental activism. Thus this thesis argues that the efficiency of shareholder activism can be increased by encouraging mainstream institutional investors to vote on shareholder activism taking into consideration firm-specific factors. It proposes that due to the social impact of pension funds and mutual funds, they should have a regulatory duty to vote on shareholder activism to promote long-term corporate value. This duty should be accompanied by a duty to disclose their voting policies and records as well as explanations for the votes. The duties should be enforced by market discipline by end investors which is facilitated by public authorities. Public enforcement should function as an enforcement mechanism of the last resort.

Item Type:	Thesis or Dissertation (PhD)
Subjects:	H Social Sciences > HD Industries. Land use. Labor
Library of Congress Subject Headings (LCSH):	Corporate governance -- Great Britain, Corporate governance -- United States, Corporations -- Investor relations -- United States, Corporations -- Investor relations -- Great Britain
Official Date:	2019
Dates:	Date Event 2019 UNSPECIFIED
Institution:	University of Warwick
Theses Department:	School of Law
Thesis Type:	PhD
Publication Status:	Unpublished
Supervisor(s)/Advisor:	Kokkinis, Andreas
Extent:	viii, 277 leaves
Language:	eng

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