Institutional Investor Activism
While much has been written about institutional investor activism in the corporate governance arena, much less is known about their advocacy activities in the realm of environmental and social issues. In fact, at least six survey articles summarize the voluminous research on corporate governance shareholder activism in the United States (Black 1997; Gillan and Starks 1998, 2007; Karpoff 2001; Romano 2001; Ferri 2011). Notably, most of the research surveyed in these articles appears in mainstream finance journals. In contrast, only Sjostrom (2008) surveys the social responsibility shareholder activism literature; she reports that of 34 studies, only one appears in a finance journal.
Yet many parallel and common issues arise when examining the role of institutional investors in both shareholder activism arenas. Two defining features of institutional investors have important implications for their potential to be effective shareholder activists. First, the fact that institutional investors often manage pools of assets on the order of billions of dollars implies that they tend to have sizable equity ownership stakes in individual companies and in the capital markets in general. As a result, they are potentially influential shareholders who are able to effect change at the companies in which they invest, ...