Symbolic Corporate Governance Politics

The Harvard Law School Forum on Corporate Governance and Financial Regulation 2014-08-11


Editor's Note: Marcel Kahan is the George T. Lowy Professor of Law at the New York University School of Law. This post is based on a paper co-authored by Professor Kahan and Edward Rock, Saul A. Fox Distinguished Professor of Business Law at the University of Pennsylvania School of Law.

Corporate governance politics display a peculiar feature: while the rhetoric is often heated, the material stakes are often low. Consider, for example, shareholder resolutions requesting boards to redeem poison pills. Anti-pill resolutions were the most common type of shareholder proposal from 1987–2004, received significant shareholder support, and led many companies to dismantle their pills. Yet, because pills can be reinstated at any time, dismantling a pill has no impact on a company’s ability to resist a hostile bid. Although shareholder activists may claim that these proposals vindicate shareholder power against entrenched managers, we are struck by the fact that these same activists have not made any serious efforts to impose effective constraints on boards, for example, by pushing for restrictions on the use of pills in the certificate of incorporation. Other contested governance issues, such as proxy access and majority voting, exhibit a similar pattern: much ado about largely symbolic change.

Click here to read the complete post...


From feeds: Aggregation Hub » The Harvard Law School Forum on Corporate Governance and Financial Regulation


academic research comparative corporate governance & regulation corporate governance edward rock governance reform management marcel kahan public interest shareholder activism shareholder power


Marcel Kahan, NYU School of Law,

Date tagged:

08/11/2014, 11:20

Date published:

08/11/2014, 09:12