In some cases shareholder activism is directed against other large shareholders, not against directors. Shareholder activism can be collaborative, in particular when it is conducted in private.

Shareholder activism is controversial. Proponents argue that companies with active and engaged shareholders are more likely to be successful in the long term than those that are left to do what they choose. Vigilant shareholders are said to play the role of fire alarms and their mere presence can alleviate managerial or boardroom complacency. When companies perform poorly, shareholders activists are said to play the role of fire brigades that bring about change and more quickly than would have been the case had the fire brigade been on strike.

Opponents say that "shareholder activism" is a euphemism for disruptive, uninformed, populist ranting or "take the money and run". In its extreme forms activism is said to be an extortion scheme that weakens strong companies. More fundamentally, there is disagreement about how much power shareholders should delegate to corporate boards and when direct shareholder action becomes necessary and on what terms. In some countries, organized labour is accused of using shareholder activism tactics as a capitalist tool in the class struggle.

Scientific research on shareholder activism started in the United States and has mostly focused on public activism by institutional investors in the late 1990s. The results are well documented in a number of literature surveys and not altogether encouraging: “A small number of American institutional investors … spend a trivial amount of money on overt activism efforts… Institutions achieve the effects on firm performance that one might expect from this level of effort - namely, not much.“ (Black 1998) “Most evidence indicates that shareholder activism can prompt small changes in target firms’ governance structures, but has negligible impact on share values and earnings“ (Karpoff 2001)

Shareholder activism is, of course, not confined to the United States and the latest research suggests that shareholder activism can be more successful in other parts of the world. At the same time, the nature of activism is changing, also in the United States. There is heightened interest in new activism players – like hedge funds – and new tactics they use, like derivatives dealing and stock lending.

The ECGI itself does not take a position on these matters. Rather, the purpose of the Institute is to generate research, stimulate debate and disseminate best practice. In these pages therefore, you will find links to proprietary ECGI research and other references to material on this important topic. They are continuously developed as new information becomes available.