Massimo Belcredi, Luca Enriques Institutional Investor Activism in a Context of Concentrated Ownership and High Private Benefits of Control: the Case of Italy (01 Jan 2014) Available at ECGI: http://ecgi.global/working-paper/institutional-investor-activism-context-concentrated-ownership-and-high-private
This is a draft chapter for a forthcoming volume, The Research Handbook on Shareholder Power, edited by Randall Thomas and Jennifer Hill (Cheltenham:Edgar Elgar).
This chapter describes the experience with activist institutional investors in an apparently unfavorable corporate environment (Italy), commonly depicted as one of concentrated ownership, notoriously inadequate legal protection for minority shareholders and an apparent disregard for their interests by controlling shareholders. We document a non-negligible volume of ?core? active institutional investment, together with some idiosyncratic forms of activism (the appointment of ?minority? directors on the boards of Italian listed companies). We attempt to evaluate whether what we see is genuine shareholder-value oriented activism or a strategy to engage in a privileged relationship with controlling shareholders, in order to share in private benefits of control extraction. We find no sufficient evidence to support a ?dark side? view of shareholder activism, at least as a general explanation. Instead, we provide recent anecdotal evidence of initiatives effectively aimed to curb the extraction of private benefits by dominant shareholders.
In the wake of the corporate scandals of the early 2000s, Italian policymakers tackled tunnelling via related party transactions (RPTs) by enacting a three-layer regime: a statute setting the goals of a regulation (transparency, and substantial...Read more
Hedge fund activism is associated with improvements in the governance and performance of targeted firms. In this paper, we show that the positive effects of activism reach beyond the targets, as yet-to-be-targeted peers make similar improvements...Read more
For decades, corporate law played a pivotal role in regulating corporations across the United States. Consequently, Delaware, the leading state of incorporation, and its courts came to occupy a central and influential position in corporate law...Read more
Corporations play a crucial role in achieving a sustainable world. In achieving corporate sustainability, the current regulatory frameworks generally emphasize the role of the corporate board, but today’s media suggest that institutional...Read more