February 25, 2008
Activist shareholders are on a roll, launching initiative after initiative to change
the companies whose shares they own.
While investor activism was strong in the early 1900s, securities laws in the 1930s
put limits on it. In 1942, the Securities and Exchange Commission let shareholders
submit proposals for corporate ballots. Proxies and other means have been used to
pressure corporate boards and executives.
But a recent study by professors Stuart Gillan of Texas Tech University and Laura Starks of the University of Texas found that, apart from potential short-term positives of activist initiatives, there is "little evidence of improvement in the long-term operating or stock-market performance of the targeted companies."