Shareholder activists: A threat for the global ecconomy?

• Main Author: Aurelio GURREA-MARTINEZ
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2016
• Subjects: Banking and Finance Law; Business Organizations Law
• Online Access: https://ink.library.smu.edu.sg/sol_research/3742
• Institution: Singapore Management University

The rise of shareholder activism has become a global phenomenon. Shareholder activists are not only present–as they started–in the US, but also in European and Asian Markets. This situation has generated a vast literature about the desirability (or not) of shareholder activism. In essence, there are two main positions: (i) those who argue that shareholder activists improve the corporate governance of the firm, and therefore they help increase the value of the firm;and (ii) those who claim that shareholder activists only improve the value of the firm in the short-term, and they encourage managers to cut investment in research, development and other long-term projects with higher profitability (but less liquidity) that may best contribute to the promotion of social welfare.