'Low Cost' Shareholder Activism : A Review of the Evidence

In this study, I review the evidence on 'low-cost' tools of shareholder activism, such as shareholder proposals and shareholder votes in uncontested director elections, and make suggestions for future research. This form of activism contrasts with what I call 'activism via large ownership', which requires significant equity stakes (e.g. hedge fund activism, proxy fights). 'Activism via large ownership' is not an option for a large class of investors (e.g. diversified funds) and it is prohibitively costly to implement in large firms. Hence, it is important to understand the effectiveness of low-cost activism, also in view of recent regulatory reforms empowering shareholders, such as say on pay, proxy access and the elimination of broker non-votes