Research Handbook on Shareholder Power
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Research Handbook on Shareholder Power

Edited by Jennifer G. Hill and Randall S. Thomas

Much of the history of corporate law has concerned itself not with shareholder power, but rather with its absence. Yet, as this Handbook shows, there have been major shifts in capital market structure that require a reassessment of the role and power of shareholders. This book provides a contemporary analysis of shareholder power and considers the regulatory consequences of changing ownership patterns around the world. Leading international scholars in corporate law, governance and financial economics address these central issues from a range of different perspectives including historical, contemporary, legal, economic, political and comparative.
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Chapter 6: Hedge fund activism in Europe: does privacy matter?

Marco Becht, Julian Franks and Jeremy Grant


Shareholder activism in Europe is sometimes difficult to observe. There are few shareholder proposals put forward at annual meetings on the Continent and even fewer in the United Kingdom. Activism by hedge funds is relatively more frequent but data is only available on the most public cases. This does not imply that shareholder activism in Europe is non-existent; on the contrary. The lack of shareholder proposals could be the result of real shareholder power that only needs to surface occasionally. We analyze this proposition in a non-random sample of 131 European interventions from five activist funds which have provided the authors with proprietary information. Of these 131 interventions, 57 were not made public either during or subsequent to the intervention. Investigating private activism is important because, when it is combined with public activism, it provides a better measure of the overall level of activity. It also allows us to examine the issue of whether private engagements are more profitable than public and hostile engagements, rather like the comparison with hostile versus agreed takeovers (although not all public engagements are hostile and not all private ones are friendly). Our findings indicate that shareholder activists in Europe are more influential than the public numbers might suggest. Also, private engagement outcomes are more profitable when there is chairman turnover and non-takeover restructuring (spin-offs, equity carve-outs). Private activism appears to be particularly significant when engaging with blockholder controlled companies.

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