Shareholders’ Role and Responsibilities in Times of Corporate Disruptions

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Corporate governance and boards of directors are experiencing an increasing complexity and uncertainty in a world of major geopolitical, technology, climate and social disruptions. This one-day Conference will feature seven sessions by leading scholars who will share the latest research and practical insights on these major themes:

• The nature and impact of different types of shareholders (i.e. institutional shareholders, pension funds, family offices, private equity) on governance effectiveness.
• The impact of different types of shareholders on helping companies deal with significant disruptions such as technology, sustainability or polarization.
• The effects of different types of shareholders on board structure, composition and long-term strategic decisions in an uncertain business context.
• The changing preferences of different types of investors on financial value creation and social value when there are trade-offs.
• Board engagement with different types of shareholders.

Finally, a panel discussion with distinguished board members will provide insightful knowledge on the role of boards of directors and shareholders in promoting better governance and contributing to the firm’s ongoing transformation.

More about the conference theme

Corporate governance research and regulation have widely assumed that boards should maximize shareholders’ value and protect shareholders’ economic returns as their top priority. Recently, this view has been challenged in several ways.
The first challenge is that companies are facing more disruptive economic and social environments. Boards and management teams should respectively govern and manage firms to create value sustainably.

In many cases, this goal requires large, long-term investments in areas such as decarbonization, developing more resilient global supply chains and deploying artificial intelligence. In facing these decisions, boards will need to gain shareholder’s support and alignment with these policies. The nature of these investments also involves a different mix of risk, return and time horizons.

The second challenge is that regulators, investors, and public opinion are promoting critical goals related with climate and social issues, in some cases, without a clear material relation with the firm. In particular, the growing emergence of investors as supporters of environmental and social goals whose impact on financial performance may not be positive in the short term is a new phenomenon. Some central questions affecting shareholders need to be addressed: Should shareholders support pro-social policies, such as sustainability, beyond their materiality? Should shareholders pursue financial returns and decide afterwards the social causes they want to support? Do companies that adopt purpose or pro-social policies do better financially?

The third challenge is the trade-off between short-term and long-term value creation, how to define these different time horizons and which implications they have for company valuation. This trade-off is acute in decarbonization decisions or reconfiguring the global value chain. The responsibility of shareholders in confirming the chosen time horizon is indispensable.

Along with these challenges, several positive changes can be observed in corporate governance. The first is that many family-controlled firms are adopting international governance practices first introduced by listed firms. In this respect, with additional disclosure and adoption of best corporate governance practices, family firms seem committed to improving corporate governance. This is particularly relevant, because families as investors are the most important group of corporate owners around the world.

The second change is the growing awareness of large institutional investors to engage constructively with boards of directors in the firms they have invested to help improve the long-term value creation process through better governance. The notion of stewardship adopted by some institutional investors is a very promising avenue for improving the relationship between shareholders and boards of directors.

The third change is the more pragmatic attitude that private equity firms are adopting to help companies manage different transitions and transformation, including sustainability, digital and AI. This is particularly interesting because private equity firms have emerged as a very large category of firm’s shareholders.

This IESE ECGI conference will explore the different perspectives, goals and strategies of different types of shareholders, in relation with the investment that companies need to consider to tackle major disruptions. In these decisions, shareholders need to consider goals that they pursue, the expectations that they have about the companies they invested in and the specific adoption of corporate governance mechanisms to monitor management and be forces of change.

In the end, responsible shareholders may help create long-term value sustainably and became actors that not only care about their investments, but also about the companies they invest in and the companies’ impact on society.

 

📆 Conference details: 
Monday, 31 March 2025, 09.00 - 18.30 (CEST)

📍 Conference Location: Madrid Campus Camino del Cerro del Águila, 3, 28023, IESE Business School, Madrid, Spain
 

Note: This is an in-person event. Recordings will be published on the ECGI website.
There is no fee for registration.
 

For more information please see here