Abstract
This paper studies the dynamic relationship between shareholder activism, governance regimes, and management actions, by examining the effectiveness of voting on shareholders initiated poison pill proposals. Using the Gompers, Ishii, and Metrick (2003) framework, we first examine shareholders' alignment and their impact on vote outcome in two different governance regimes i.e. democracies versus dictatorships. We then examine the determinants and consequences of management responsiveness. We observe that dictatorships rally activism: ownerships by mutual funds, advisors and pension funds play a leading role in supporting pill-related proposals. In contrast, shareholders in democracies are not as forceful in expressing their voice. Among all institutional shareholders, management seems to respond to mutual funds' and pension funds' pressures. Unlike democracies, managers in dictatorships are less likely to respond favorably to shareholder initiatives, and such management irresponsiveness appears to be increasingly costly.
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