In this paper we use interview data to explore the ‘new shareholder activism’ of mainstream UK institutional investor We describe contemporary practices of corporate governance monitoring and engagement and how they vary across institutions, and explore the motivations behind them Existing studies of shareholder activism mainly assume that it is motivated by a desire to maximize shareholder value, and we find some evidence both of this and of alternative political/moral motivations related to ideas of responsible ownership We conclude, however, that in the current situation both these act primarily as rationalizations rather than as genuine motivators The main driving force behind the new shareholder activism is the institutions' own profit maximisation and the need to position themselves against competitor institutions in the context of political and regulatory changes that have significantly changed the non-financial expectations of their clients.
BainbridgeS. (1995) The politics of corporate governance: Roe's strong managers, weak owners, Harvard Journal of Law and Public Policy, 18: 671–734.
2.
BechtM.MayerC. (2001) The control of corporate Europe, in BarcaF.BechtM. (eds), The Control of Corporate Europe (Oxford: Oxford University Press).
3.
BlackB. (1990) Shareholder passivity re-examined, Michigan Law Review, 89: 520–608.
4.
BlackB. (1998) Shareholder activism and corporate governance in the United States, in NewmanP. K. (ed.), The New Palgrave Dictionary of Economics and Law (Basingstoke: Palgrave Macmillan), pp. 459–465.
5.
BlackB. (2000) The first international merger wave (and the fifth and last US wave), University of Miami Law Review, 54: 799–818.
6.
BlackB.CoffeeJ. C. (1994) Hail Britannia? Institutional investor behaviour under limited regulation, Michigan Law Review, 92: 1997–2087.
ConyonM. J.PeckS. I.ReadL. E.SadlerG. V. (2000) The structure of executive compensation contracts: UK evidence, Long Range Planning, 33: 478–503.
9.
DavisG. F.ThompsonT. A. (1994) A social movement perspective on corporate control, Administrative Science Quarterly, 39: 141–173.
10.
EisenhardtK. M. (1989) Agency theory: An assessment and review, Academy of Management Review, 14: 57–74.
11.
FamaE. F. (1980) Agency problems and the theory of the firm, Journal of Political Economy, 88:288–307.
12.
GillanS. L.StarksL. T. (1998) A survey of shareholder activism: Motivation and empirical evidence, Contemporary Finance Digest, 2(3): 10–34.
13.
GillanS. L.StarksL. T. (2000) Corporate governance proposals and shareholder activism: The role of institutional investors, Journal of Financial Economics, 52: 275–305.
14.
HawleyJ.WilliamsA. (1997) The emergence of fiduciary capitalism, Corporate Governance, 5: 206–213.
15.
HendryJ. (2005) Beyond self-interest: Agency theory and the board in a satisficing world, British Journal of Management, 16: S55–S64.
16.
HendryJ.SandersonP.BarkerR.RobertsJ. D. (2006) Owners or traders? Conceptualizations of institutional investors and their relationship with corporate managers, Human Relations, 59: 1077–1100.
HiggsD. (2003) Review of the role and effectiveness of non-executive directors, Department of Trade and Industry, at www.dti.gov.uk/cld/non_exec_review.
20.
HollandJ. B. (1998) Influence and intervention by financial institutions in their investee companies, Corporate Governance, 6: 249–264.
JacksonA. (2001) Towards a ‘mutual understanding of objectives’? Attitudes of institutional investors and listed companies to corporate governance reform, Corporate Governance, 9: 196–205.
23.
JensenM. C.MecklingW. H. (1976) Theory of the firm: Managerial behavior, agency costs and ownership structure, Journal of Financial Economics, 3: 305–360.
24.
KarpoffJ. M. (1998) The impact of shareholder activism on target companies: A survey of empirical findings, University of Washington working paper.
25.
KayJ.SilberstonA. (1995) Corporate governance, National Institute Economic Review, 153:84–98.
26.
LewisW. (2004) Captains of industry summon investors to secret peace talks, Sunday Times, 29 February.
27.
MorganO. (2003) Shareholders doing the dirty work, The Observer, 26 October.
28.
MynersP. (2001) Institutional investment in the United Kingdom: A review (London: HM Treasury).
29.
MynersP. (2003) Travers Smith Braithwaite Lecture, Cambridge Law Faculty, 7 May.
30.
ParkinsonJ. E. (2000) The conceptual foundations of the company: A pluralist approach, ParkinsonJ. E.GambleA.KellyG. (eds), The Political Economy of the Company (Oxford: Hart Publishing), pp. 113–139.
31.
PozenR. C. (1994) Institutional investors: The reluctant activists, Harvard Business Review, January-February: 140–149.
32.
RhoH.-K. (2002) Changing institutions in Korea: Corporate governance reform through shareholder activism, University of Cambridge PhD thesis.
33.
RobertsJ. D. (2001) Trust and control in Anglo-American systems of corporate governance: The individualising and socialising effects of processes of accountability, Human Relations, 54:1547–1572.
34.
RoeM. J. (1994) Strong Managers, Weak Owners: The Political Roots of American Corporate Finance (Princeton, NJ: Princeton University Press).
35.
RomanoR. (2001) Less is more: Making shareholder activism a valuable mechanism of corporate governance, Yale Journal on Regulation, 18: 174–251.
36.
RosenbergH. (1999) Traitor to his Class: Robert A. G. Monks and the Battle to Change Corporate America (New York: Wiley).
37.
RyanL.SchneiderM. (2002) The antecedents of institutional investor activism, Academy of Management Review, 27: 554–573.
38.
StapledonG. (2000) Institutional investors: What are their responsibilities as shareholders?, in ParkinsonJ. E.GambleA.KellyG. (eds), The Political Economy of the Company (Oxford: Hart Publishing).
39.
ThompsonT. A.DavisG. F. (1997) The politics of corporate control and the future of shareholder activism in the United States, Corporate Governance, 5: 1152–1159.
40.
UseemM. (1996) Investor Capitalism: How Money Managers are Changing the Face of Corporate America (New York: Basic Books).
