Business, Management and Accounting
4 years ago

Legal barriers hinder institutional investor activism in Europe and US, impacting corporate governance.

RePEc: Research Papers in Economics
A Comparative Analysis of the Legal Obstacles to Institutional Investor Activism in Europe and in the US
Paolo Santella, Enrico Baffi, Carlo Drago, Dino Lattuca

Paper Summary

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The article compares obstacles to investor activism in Europe and the US. US investors have easier access to voting rights than EU investors. Conflicts of interest limit activism in both regions. Some laws restrict investors from coordinating voting. Stock lending favors controlling shareholders over institutional investors. US investors are more adversarial towards companies than UK investors. French investors are most adversarial due to control-enhancing mechanisms. Greek, Belgian, and Swedish investors also have adversarial stances. Italian investors have low voting turnout. EU investors' voting patterns are influenced by control-enhancing mechanisms and ownership concentration.