Shareholder Empowerment, Steps Forward and Steps Back: Comparative Analysis of the US and UK Regulations

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    Purpose
    The global financial crisis of 2007-2008 prompted a significant debate on corporate governance and shareholder empowerment. A question arises as to whether shareholders ought to be further empowered to have a greater influence over the companies’ activities. Yet, it is not self-evident that shareholder empowerment ensures better-run companies’ corporate activities. Thus, the purpose of this paper is to critically examine, identify and explain the corporate regulation forms and control collectively to evaluate the effectiveness of shareholder empowerment fully.

    Design/methodology/approach
    To do so, this paper sets out a comparative analysis approach between two jurisdictions, the UK and Delaware in the USA. The paper further addresses by undertaking three case studies; Barclays Plc which illustrated the Comply or Explain role, AVIVA (2012) that concentrated on the impact of the shareholder revolt, and the case of Hills Stores Co. v. Bozic (2000), which involved a claim brought by shareholders on the grounds of a breach of fiduciary duty.

    Findings
    This paper argues that the shareholder empowerment theoretically provides an effective means through which corporate activities can be regulated. However, to do this, account must be taken that a distinction should be made between long-term and short-term investors to encourage shareholder engagement by responsible long-term investors. Furthermore, the shareholders can exercise their powers effectively and influence the Board’s decision to award executive compensation.

    Originality/value
    This paper offered two distinct contributions: assessing whether in times of crisis shareholder empowerment represents a way to regulate corporate activities and by assessing the distinction between the perception of shareholder empowerment and the reality in practice.

    Documents

    DOI

    Original languageEnglish
    Pages (from-to)169-196
    JournalJournal of Financial Regulation and Compliance
    Journal publication date26 Apr 2019
    Issue number2
    Volume27
    Early online date26 Apr 2019
    DOIs
    Publication statusEarly online date - 26 Apr 2019

      Research areas

    • original Article, research Article, shareholders activism, Corporate governance, corporate Reform, shareholder Empowerment, Comparative Corporate Governance, Comparative Law, comparative analysis, UK Law, US Law, shareholders, Financial Crisis, Research, academic research, academic publishing, shareholders engagement, shareholders value, Corporate Culture; Stakeholder Management; United Kingdom Construction Industry; Theory, corporate philanthropy, Law and finance, Policy convergence, policy change, Policy implementation, Policy transfer, police accountability, Accountability, comparative corporate governance, Case Study research, case study, US, UK

    ID: 155672683