Lori Verstegen Ryan

Shareholder Activism A Multidisciplinary Review

Shareholder activism has become a dynamic institutional force, and its associated, rapidly increasing body of scholarly literature affects numerous disciplines within the organization science academy. In addition to equivocal results concerning the impact of shareholder activism on corporate outcomes, the separation of prior research into financial and social activism has left unanswered questions critical for both the scholarly discourse on shareholder activism and the normative debate on shareholder empowerment. The heterogeneity of factors in shareholder activism, such as the firm, activist, and environmental characteristics that promote or inhibit activism, along with the breadth of activism’s issues, methods, and processes, provide a plethora of theoretical and methodological opportunities and challenges for activism researchers. Our multidisciplinary review incorporates the financial and social activism streams and explores shareholder activism heterogeneity and controversy, seeking to provide an impetus for more cohesive conceptual and empirical work in the field.

Corporate Governance in South Africa: A Bellwether for the Continent?

The recent onslaught of corporate scandals has compelled the world to acknowledge the profound impact of corporate governance practices on the global economy. Corporate governance is of particular concern in developing economies, where the infusion of international investor capital and foreign aid is essential to economic stability and growth. This paper focuses attention on corporate governance initiatives in South Africa, given its significance as an emerging market, its potential leadership role on the African continent and the countrys notable corporate governance reform since the collapse of apartheid in 1994. The evolution of the countrys corporate structure and the forces driving corporate governance reform over the past decade will be examined, followed by a review of the most notable reform initiatives in place today. Finally, an assessment of those initiatives will be presented, along with recommendations concerning how South Africas initiatives can serve as models of enhanced corporate governance standards for the African continent. Copyright (c) 2006 The Authors; Journal compilation (c) 2006 Blackwell Publishing Ltd.

Institutional Investor Power and Heterogeneity Implications for Agency and Stakeholder Theories

This article examines the implications of the escalation in institutional inves power and heterogeneity for two dominant theories of corporate governanceagency theory and stakeholder theory. From this analysis, a new view of the agency relationship between institutional investors and their portfolio firms emerges, which recognizes the institutions’ market power, complex role as financial intermediaries, and possible involvement in simultaneous and opposing agency contracts. We also conclude that stakeholder theorists should reconsider these newly empowered shareholders’moral standing in relation to their portfolio firms, and they should reexamine the identities and goals of these modern investors. To that end, we demonstrate that a novel, intragroup application of Mitchell, Agle, and Wood’s stakeholder framework to heterogeneous institutional investors illuminates their varying levels of stakeholder salience.

Corporate Governance and Business Ethics in North America: The State of the Art

All three corporate governance systems in North America are currently embroiled in fundamental transformations. Most of Mexico’s corporations are run by a small group of controlling shareholders and operate in an economic system rife with corruption. Recent political reforms and a desire to tap global equity markets have heightened their interest in improving corporate governance structures. United States corporations face a dispersed ownership base that has tended toward inattentiveness, allowing such infamous scandals as Enron to rock the global investing community. A backlash against the ensuing, restrictive Sarbanes-Oxley legislation is now underway. Like Mexico’s, Canada’s major corporations are led by a handful of controlling shareholders, but corruption is uncommon. New corporate governance guidelines are under debate, and the Ontario Securities Commission is wresting control from the Toronto Stock Exchange. Although these three corporate governance systems vary in terms of ownership dispersion, level of corruption, and legislative intervention, they currently share a common focus on fundamental reform.

Shareholder Empowerment: An Introduction

Recent trends in shareholder empowerment have spurred a heated debate about whether empowered shareholders will ultimately cure corporate ills or adversely affect corporate fortunes. Publicly traded corporations are uniquely positioned to facilitate financial risk bearing, due to their dispersed ownership and liquidity and shareholders’ ability to diversify their financial risk (Easterbrook & Fischel, 1985). They have not only served as “the main engine of economic progress” in the twentieth century (Jensen, 1989: 61), but have also driven social progress by facilitating professionalism, upward mobility, and meritocracy, as well as by providing job stability, and retirement and health care benefits (Davis, 2011, 2013; Demsetz, 1983). The United States “owed everything to the corporation,” writes Beatty (2001), tracing the very development of democracy in the United States to the morphing of early settler companies into a commonwealth. Yet views on corporations have polarized from “the basis of the prosperity of the West and the best hope for the future of the rest of the world” (Micklethwait & Wooldridge, 2003) to the critical query, “are corporations evil?” (Litowitz, 2003).

Perspectives on Strategic Implications of Shareholder Activism

Shareholder activism has attracted significant attention in research ranging from finance to strategy, management, and organizational theory, as the phenomenon has become increasingly prominent in the last few decades. However, strategic implications of shareholder activism have remained vague. Specifically, the papers take the perspective of activists and other shareholders, of the management of targeted firms, and of the management of non- targeted firms. By bringing these perspectives together, we aim to expand current literature and raise important questions regarding the strategic implications of shareholder activism that can affect diverse stakeholders. Shareholder Engagement in the Face of Conflicting Shareholder Interests Presenter: Maria Goranova; U. of Wisconsin, Milwaukee Presenter: Lori Verstegen Ryan; San Diego State U. Examining Focus and Style as Predictors of Activist Investors Rates of Success Presenter: Christine Shropshire; Arizona State U. Presenter: Jisun Kim; U. of Mississippi The Ri...