The Experts below are selected from a list of 87 Experts worldwide ranked by ideXlab platform
Artur Raviv - One of the best experts on this subject based on the ideXlab platform.
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control of corporate decisions Shareholders vs management
Review of Financial Studies, 2010Co-Authors: Milton Harris, Artur RavivAbstract:Activist Shareholders have lately been attempting to assert themselves in a struggle with management and regulators over control of corporate decisions. These efforts have met with mixed success. Meanwhile, Shareholders have been pressing for changes in the rules governing access to the corporate proxy process, especially in regard to nominating directors. The key issue which these events have brought to light is whether, in fact, Shareholders will be better off with enhanced control over corporate decisions. Proponents of increased shareholder participation argue that such participation is needed to counter the agency problems associated with management decisions. In this view, boards of directors do not exercise sufficient control over self-interested managers because management insiders typically hand-pick directors through their control of the proxy process. Opponents offer several arguments such as that Shareholders lack the requisite knowledge and expertise to make effective decisions or that Shareholders may have incentives to make value-reducing decisions. In this paper, we investigate what determines the optimality of shareholder control, taking account of some of the above arguments, both pro and con. Our main contribution is to use formal modeling to uncover some factors overlooked in these arguments. For example, we show that the claims that Shareholders should not have control over important decisions because they lack sufficient information to make an informed decision or because they have a non-value-maximizing agenda are flawed. On the other hand, it has been argued that, since Shareholders have the “correct” objective (value maximization) and can always delegate the decision to insiders when they believe insiders will make a better decision, Shareholders should control all major decisions. We show that this argument is also flawed.
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control of corporate decisions Shareholders vs management
Social Science Research Network, 2010Co-Authors: Milton Harris, Artur RavivAbstract:Activist Shareholders have lately been attempting to assert themselves in a struggle with management and regulators over control of corporate decisions. These efforts have met with mixed success. Meanwhile, Shareholders have been pressing for changes in the rules governing access to the corporate proxy process, especially in regard to nominating directors. The key issue which these events have brought to light is whether, in fact, Shareholders will be better off with enhanced control over corporate decisions. Proponents of increased shareholder participation argue that such participation is needed to counter the agency problems associated with management decisions. Opponents argue that Shareholders lack the requisite knowledge and expertise to make effective decisions or that Shareholders may have incentives to make value-reducing decisions. In this paper, we investigate what determines the optimality of shareholder control, taking account of some of the above arguments, both pro and con. Our main contribution is to use formal modeling to uncover some factors overlooked in these arguments. For example, we show that the claims that Shareholders should not have control over important decisions because they lack sufficient information to make an informed decision or because they have a non-value-maximizing agenda are flawed. On the other hand, it has been argued that, since Shareholders have the correct objective (value maximization) and can always delegate the decision to insiders when they believe insiders will make a better decision, Shareholders should control all major decisions. We show that this argument is also flawed.
Mihaela E Firsirotu - One of the best experts on this subject based on the ideXlab platform.
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hedge funds as Activist Shareholders passing phenomenon or grave diggers of public corporations
Social Science Research Network, 2007Co-Authors: Yvan Allaire, Mihaela E FirsirotuAbstract:The recent wave of corporate scandals has placed corporate executives and boards of directors in the cross hairs of public opinion. However, the tactics of some new wave investors, particularly some breed of hedge funds (which would be more aptly called speculative funds), and their relentless efforts to commoditize industrial firms may bring the investor community under closer scrutiny. By their very actions and successes, hedge funds of the speculative kind are raising a number of very serious issues about the future of corporations and even about their impact on the industrial structures of countries.This paper stresses several points and arguments made by key researchers:1. The realities of contemporary stock markets are made of high stock churn rate, short holding period, vote buying activities, record date capture, short selling, stock lending, huge volume of stock derivatives, fairly long period of time between record date and date of annual meeting. As a result, the common assumptions underlying corporate democracy have been made obsolete; the huge volume of share trading by hedge funds is a major contributing factor to these developments;2. Some variants of hedge funds are now in the business of pressuring management and directors to undertake actions they deem likely to boost share prices; to enhance their ability to achieve their ends, they take full advantage of the anomalies and imperfections of corporate democracy;3. A significant presence in the shareholder base of a company of short-term, transient investors does have an impact on the way a company is managed;4. In the contemporary world of finance, the one-share/one-vote incantation rings hollow; it may be sub-optimal and a source of serious distortions;5. Unfettered trading in the control of companies, as if they were a commodity, a metal, or a piece of commercial real estate, may be the goal of some players in the financial markets; but the aggressive pursuit of that goal may bring about government policies and popular attitudes far less beneficial to reasonable investors.This paper reviews the range of options proposed to curtail their ability to do harm. As documented by Black and Hu (2006a,b) and Martin and Partnoy (2005), their ability and willingness to capitalize on the weaknesses of corporate democratic processes raise serious issues, which have led to calls for measures to fence in these funds and limit the damages they may inflict on societies.
Milton Harris - One of the best experts on this subject based on the ideXlab platform.
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control of corporate decisions Shareholders vs management
Review of Financial Studies, 2010Co-Authors: Milton Harris, Artur RavivAbstract:Activist Shareholders have lately been attempting to assert themselves in a struggle with management and regulators over control of corporate decisions. These efforts have met with mixed success. Meanwhile, Shareholders have been pressing for changes in the rules governing access to the corporate proxy process, especially in regard to nominating directors. The key issue which these events have brought to light is whether, in fact, Shareholders will be better off with enhanced control over corporate decisions. Proponents of increased shareholder participation argue that such participation is needed to counter the agency problems associated with management decisions. In this view, boards of directors do not exercise sufficient control over self-interested managers because management insiders typically hand-pick directors through their control of the proxy process. Opponents offer several arguments such as that Shareholders lack the requisite knowledge and expertise to make effective decisions or that Shareholders may have incentives to make value-reducing decisions. In this paper, we investigate what determines the optimality of shareholder control, taking account of some of the above arguments, both pro and con. Our main contribution is to use formal modeling to uncover some factors overlooked in these arguments. For example, we show that the claims that Shareholders should not have control over important decisions because they lack sufficient information to make an informed decision or because they have a non-value-maximizing agenda are flawed. On the other hand, it has been argued that, since Shareholders have the “correct” objective (value maximization) and can always delegate the decision to insiders when they believe insiders will make a better decision, Shareholders should control all major decisions. We show that this argument is also flawed.
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control of corporate decisions Shareholders vs management
Social Science Research Network, 2010Co-Authors: Milton Harris, Artur RavivAbstract:Activist Shareholders have lately been attempting to assert themselves in a struggle with management and regulators over control of corporate decisions. These efforts have met with mixed success. Meanwhile, Shareholders have been pressing for changes in the rules governing access to the corporate proxy process, especially in regard to nominating directors. The key issue which these events have brought to light is whether, in fact, Shareholders will be better off with enhanced control over corporate decisions. Proponents of increased shareholder participation argue that such participation is needed to counter the agency problems associated with management decisions. Opponents argue that Shareholders lack the requisite knowledge and expertise to make effective decisions or that Shareholders may have incentives to make value-reducing decisions. In this paper, we investigate what determines the optimality of shareholder control, taking account of some of the above arguments, both pro and con. Our main contribution is to use formal modeling to uncover some factors overlooked in these arguments. For example, we show that the claims that Shareholders should not have control over important decisions because they lack sufficient information to make an informed decision or because they have a non-value-maximizing agenda are flawed. On the other hand, it has been argued that, since Shareholders have the correct objective (value maximization) and can always delegate the decision to insiders when they believe insiders will make a better decision, Shareholders should control all major decisions. We show that this argument is also flawed.
Suren Gomtsian - One of the best experts on this subject based on the ideXlab platform.
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different visions of stewardship understanding interactions between large investment managers and Activist Shareholders
Social Science Research Network, 2021Co-Authors: Suren GomtsianAbstract:The rise of a small group of investment (asset) managers with an enormous potential to influence corporate decision-making has reinforced attention to shareholder stewardship as one of the pillars of corporate governance. But weak incentives to invest in shareholder oversight and limited resources confine voting and engagement by large investment managers. According to an influential argument, Activist Shareholders can offer a solution by supplying large investment managers with company-specific information. This paper advances a thesis that stewardship efforts of large investment managers are unlikely to be informed by Activist campaigns and offers empirical evidence and illustrative case studies supporting this claim. The paper argues that large investment managers and hedge fund Activists – the most prominent group of Activist Shareholders – have different visions of stewardship with little scope for interactions. For large investment managers, general corporate governance and sustainability themes have priority over the traditional topics of Activist demands targeting business and operating matters. Consistent with the different visions of stewardship, data from the FTSE 350 companies show that associations between Activist demands and the voting behavior of the top investment managers vary based on Activist types and demand topics. Activist demands initiated by hedge funds and on business and operating matters receive less support. Importantly, differences between fund groups with predominantly active or passive indexing strategies in the likelihood of opposing corporate managers in Activist targeted firms are minimal. These findings offer better understanding of institutional investor stewardship and have important practical implications for building regulatory frameworks for effective stewardship.
Yvan Allaire - One of the best experts on this subject based on the ideXlab platform.
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hedge funds as Activist Shareholders passing phenomenon or grave diggers of public corporations
Social Science Research Network, 2007Co-Authors: Yvan Allaire, Mihaela E FirsirotuAbstract:The recent wave of corporate scandals has placed corporate executives and boards of directors in the cross hairs of public opinion. However, the tactics of some new wave investors, particularly some breed of hedge funds (which would be more aptly called speculative funds), and their relentless efforts to commoditize industrial firms may bring the investor community under closer scrutiny. By their very actions and successes, hedge funds of the speculative kind are raising a number of very serious issues about the future of corporations and even about their impact on the industrial structures of countries.This paper stresses several points and arguments made by key researchers:1. The realities of contemporary stock markets are made of high stock churn rate, short holding period, vote buying activities, record date capture, short selling, stock lending, huge volume of stock derivatives, fairly long period of time between record date and date of annual meeting. As a result, the common assumptions underlying corporate democracy have been made obsolete; the huge volume of share trading by hedge funds is a major contributing factor to these developments;2. Some variants of hedge funds are now in the business of pressuring management and directors to undertake actions they deem likely to boost share prices; to enhance their ability to achieve their ends, they take full advantage of the anomalies and imperfections of corporate democracy;3. A significant presence in the shareholder base of a company of short-term, transient investors does have an impact on the way a company is managed;4. In the contemporary world of finance, the one-share/one-vote incantation rings hollow; it may be sub-optimal and a source of serious distortions;5. Unfettered trading in the control of companies, as if they were a commodity, a metal, or a piece of commercial real estate, may be the goal of some players in the financial markets; but the aggressive pursuit of that goal may bring about government policies and popular attitudes far less beneficial to reasonable investors.This paper reviews the range of options proposed to curtail their ability to do harm. As documented by Black and Hu (2006a,b) and Martin and Partnoy (2005), their ability and willingness to capitalize on the weaknesses of corporate democratic processes raise serious issues, which have led to calls for measures to fence in these funds and limit the damages they may inflict on societies.
