Shareholder activism is the way in which shareholders exercise their ownership rights to influence a company’s behavior. Activist investors, dissatisfied with certain aspects of a company’s management, seek to cause a change within the company by resorting to various forms of activism, ranging from selling off shares to acquisition of controlling interest in the company. In between these extreme steps, other actions like issuing private or public communications to the management and the board of directors demanding change in the company decisions, submitting shareholder resolutions, filing legal cases etc., are also taken by activist shareholders. Shareholder activism is growing very fast after the spectacular business scandals like Enron and WorldCom revealed at the turn of this millennium. Shareholder activism is exhibited by individual investors as well as institutional investors like pension funds, mutual funds, hedge funds, and labor unions by exercising their shareholder rights to influence the decisions of companies either individually or in collaboration with other shareholder groups. Shareholder activism is also supported by many labor unions and environment groups as an approach to achieve social and environmental change. Shareholder activism may have both positive and negative effects on companies. This book is divided into two sections. The first section focuses on the issues and concepts of shareholder activism and the role of institutional investors. The second section deals with cases and experiences with regard to shareholder activism.
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