The road to shareowner power

  • A dramatic rise in shareowner power and improvements in corporate governance tan be achieved in the next few years by expanding the role of proxy advisory firms. This will require changing the way such firms are paid. They are now paid directly by investors who buy their advice; but this arrangement suffers from a free-rider problem. Instead, they should be paid by each corporation about which they are advising, in accordance with shareholder vote so as to preclude management influence. This arrangement would make it economically feasible for advisory firms to expand their services, becoming proactive like relational investors. Any proxy advisor other than the market leader Stands to gain tremendously by initiating this new System. lt would eliminate the natura1 monopoly feature of the current System, and spread the tost more equitably across all shareowners. lt would also enable proxy advisory ftrms to market their Services to individual investors via the internet.

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Author:Mark Latham
Parent Title (English):Institut für Handels- und Wirtschaftsrecht (Osnabrück): Arbeitspapiere ; Nr. 81
Parent Title (German):Institut für Bankrecht (Frankfurt, Main): Arbeitspapiere ; Nr. 81
Series (Serial Number):Arbeitspapiere / Johann-Wolfgang-Goethe-Universität, Institut für Bankrecht (81)
Publisher:Institut für Handels- und Wirtschaftsrecht
Place of publication:Osnabrück
Document Type:Working Paper
Year of Completion:1999
Year of first Publication:1999
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2005/04/11
GND Keyword:Corporate Governance; Wirtschaftsprüfung; Aktionär; Trittbrettfahrerverhalten; Aktienrecht
Source:Institut für Bankrecht, Arbeitspapiere 81
Institutes:Rechtswissenschaft / Rechtswissenschaft
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
3 Sozialwissenschaften / 34 Recht / 340 Recht
Licence (German):License LogoDeutsches Urheberrecht