Voting Power and Shareholder Activism: A Study of Swedish Shareholder Meetings

ABSTRACT Manuscript Type: Empirical Research Question/Issue: This paper analyses the impact of voting power on shareholder activism using unique data on activism at Swedish shareholder meetings. We hypothesize that there is a positive relationship between shareholder activism and a measure of the largest shareholder's sensitivity to increased participation by small shareholders. Research Findings/Insights: We find that firms' amenability to small shareholder influence leads to more proposals by the nomination committee, but fewer proposals by other shareholders and fewer proposals voted against. We interpret this as evidence that the shareholder elected nomination committees effectively channel shareholder concerns and preempt other kinds of activism. In addition, we find more shareholder activity in large firms and less activity in leveraged firms. Theoretical/Academic Implications: This paper offers a new voting power approach to the study of shareholder activism. We show the empirical implications of this approach, but also the importance of local institutions such as nomination committees in shaping the nature of shareholder activism. Practitioner/Policy Implications: Politicians and companies that desire active shareholders could improve the amenability of firms to shareholder influence by ownership transparency, shareholder committees, contacts with shareholder associations and other vehicles for collective action.