The Rise of Shareholders

• Author: Anita Indira Anand
• Pages: 159-169

159

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The Rise of Shareholders

One of the themes of this book is the importance of accountability

in corporate governance. Investors in public companies sometimes

see their interests ignored by insiders who have the ability to use

their place in the corporation to benet themselves, whether they

are a founding family that wields power through multiple voting

shares or a board of directors trying to hang onto their jobs in the

face of a takeover. Investors could also suer when well-intentioned

directors stay in power without the expertise necessary to realize

the rm’s potential.

Individual retail investors, the central gures in this book, oen

cannot do much about corporate governance other than voting or

selling their shares. But in recent decades, institutional investors

have been rejecting the role of the passive shareholder and demand-

ing inclusion in corporate decision making. These investors, par-

ticularly pension funds and hedge funds, have the resources to take

matters into their own hands when they don’t like the way things

are going at the rm, rewriting corporate agendas and raising di-

cult questions for policy-makers as they go.

The Rise of Shareholder Activism

It used to be that shareholders did not seek to play a signicant role in

corporate governance. As Adolf Berle and Gardiner Means observed,

investing in a publicly traded corporation meant accepting a passive