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Balancing Governance and Culture to Create Sustainable Firm Value

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Balancing Governance and Culture to Create Sustainable Firm Value

Brookings Institution,

5 Minuten Lesezeit
5 Take-aways
Audio & Text

Was ist drin?

Activist investors clamor for change, but is shareholder governance good for firms in the long run?

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Editorial Rating

7

Qualities

  • Well Structured
  • For Experts

Recommendation

Activist shareholders have become more strident in their efforts to release the value they believe exists in the businesses in which they invest. Academic Jillian Popadak looks at the impact of such shareholder governance, which focuses more on hard returns and less on the softer aspects of corporate culture, such as customer focus. Her intriguing research provides some balancing perspective that getAbstract believes will benefit business executives, academics and investors.

Summary

Activist shareholders are increasingly demanding a greater say in how corporations manage their businesses. Shareholder governance aims to ensure that investors obtain a suitable level of return on their investment by changing how a company operates. Long-term investors, such as pension funds, typically opt for amending a firm’s bylaws. Influential investors, such as activist hedge funds, however, go a step further and propose concrete strategic actions, such as making divestitures and raising dividends, to improve returns.

As a result, a debate has emerged about whether activist shareholders...

About the Author

Jillian Popadak is an assistant professor at Duke University’s Fuqua School of Business.

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