AN EMPIRICAL INVESTIGATION INTO THE CONSTRUCTS INFLUENCING SHAREHOLDER ENGAGEMENT

Shareholder engagement used to consist of attending analyst conference calls, quarterly earnings calls and the annual meeting of shareholders; now, more often, shareholders are meeting one-on-one with representatives of the companies in which they invest. Recently, shareholders have begun to demand personal interaction with directors and not just the investor relations officer (IRO) or members of the management team. This reflects a new era in corporate governance. Today, shareholders can use different pressure tactics if the dialogue approach does not prove effective. However on one hand, even though it is widely agreed that engagement of shareholders with boa rds and management fosters successful and effective governance, on the other hand, it is taken that excess shareholder intervention may result in dissipation of valuable management time or loss of freedom of action of the boards. So, while the company boards have responsibility towards safeguarding the interest of shareholders and increasing transparency, management may not always prefer to be driven by shareholder sentiments or give in to all shareholder demands, thus making it difficult to quantify the pr ecise extent or ‘appropriate’ levels of shareholder engagement that will allow to achieve effective governance and add value to business. Boards that have strategically increased shareholder engagement have found it to foster direct communication from shareholders. This study strives to make an empirical investigation into the determinants of constructs influencing shareholder engagement among IT/ITES, Automobile and FMCG firms in Chennai City which would ultimately lead toimplementing, monitoring and co ntinuing good corporate governance practices so as to benefit the company and its shareholders. It also studies what is the authority and resources made available to shareholders and the impact of shareholder engagement on firm.