New Study Recommends Rethinking of Shareholder Activism

(07 May '07)

Source: www.rsm.nl

Rotterdam, May 1st, 2007 --- A new academic study concludes that shareholder activities of institutional investors often have a local and ceremonial character, while remaining focused on corporate governance changes that have proven not to enhance firm value. The study was contracted by Eumedion, a corporate governance platform of the largest Dutch institutional investors.

The research project was carried out by Abe de Jong (Professor of Corporate Finance), Gerard Mertens (Professor of Financial Analysis) and Hans van Oosterhout (Professor of Corporate Governance and Responsibility) from RSM Erasmus University, and Helène Vletter-van Dort (Professor of Financial Law) from the Erasmus School of Law.

The findings of this study question the general call for shareholders to become more active that was voiced in the code Tabaksblat (principle IV.1). Instead, this research supports the view that, rather than being more active across the board, shareholders should focus on the relatively few occasions where they can really make a difference because across the board activism may merely lead to ceremonial shareholder activities

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