Shareholders and Corporate Control

The Oxford team will lead on and oversee this theme, which will involve members of the following nodes:

	CEPR		Stiefelsen Östekonomiska Institutet (SITE)
	ECGI		University of Oxford
	Université Libre de Bruxelles (ULB)		London Business School (LBS)
	Stichtung Katholieke Universiteit Brabant		Sabanci University
	Universiteit van Amsterdam (UvA)

Objectives
	to provide conclusive answers to open research questions in this area;
	to use industry links to access unique data;
	to exploit the unique institutional features of Europe to produce unique insights that will be recognised internationally
Main projects
	The Evolution of Ownership and Control. Previous research has shown that there is a great variety in ownership and control arrangements across countries. This diversity has sparked a lively debate and in order to understand the reasons for such differences, it was felt that one had to go back in time and look at the evolution of ownership and control in parallel with the evolution of economic growth, regulatory reform and politics. This research examines the evolution of ownership and control. In addition to research at four training nodes (ECARES, Oxford, LBS, SITE) in this area, the network will benefit from the expertise of Randall Morck at the Alberta node, Ailsa Röell at the Princeton node and Mark Roe at the Harvard Law School node.
	Institutional shareholder activism. Institutional investors playing the role of “active owners” are widely believed to prevent and correct corporate governance failure and to improve corporate performance.However, independent scientific research has not produced conclusive evidence that institutional shareholder activism leads to change or better investment performance. On the contrary, an extensive body of research has shown that “shareholder activism” in the United States is not effective. The “negative” studies for the United States have several potential shortcomings that might drive the results. These shortcomings can be overcome in the European institutional context. The project will be undertaken by researchers from Oxford, LBS, ULB and benefit enormously from links with the Hermes industry node, one of the largest activist pension funds in Europe.
	Shareholder power and remedies Legal researchers will focus, inter alia, on measures that empower shareholders and shareholder remedies. While shareholders have the right to vote on certain structural changes such as mergers, disposal of substantially all assets, dissolution, as well as on capital increases and decreases and appropriation of parts of the corporations profits (in some jurisdictions), they frequently lack the power to get these issues on the agenda for shareholder meetings. Thus, the exercise of the voting power that statutes and articles confer upon shareholders are, as a rule, dependent on a proposal being submitted by the directors. Whether this predominance of the board needs to be cut back by giving shareholders more power to set the agenda of shareholder meetings is a question that merits further examination from a legal as well as from an economic perspective. The rules on shareholder remedies against illegal corporate or shareholder actions as well as the opportunity to challenge the validity of shareholder resolutions vary significantly in continental and common law jurisdictions. A comparative legal and economic study could shed some light on the question if and to what extent shareholders should have the right to take an active part in controlling corporate affairs and how such rules should be designed in order to prevent the types of abuse we’ve encountered in Germany with respect to the right to challenge shareholder resolutions.

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