Abstract

Purpose This paper aims to demonstrate that state shareholders are confronted with contradictory logics leading to institutional contradictions that activist shareholders can exploit. The competing logics of the state as shareholder and their impact on corporate governance and shareholder activism offer fertile grounds for research advances in Coordinated Market Economies (CMEs). Design/methodology/approach Through an extensive literature review of state ownership, institutional contradictions and shareholder activism, this paper analyzes two case studies involving the French State as shareholder. Findings In the French context, these two cases illustrate how institutional contradictions result in opportunities for shareholder activism. By focusing on the institutional contradictions of the state shareholder, this investigation suggests a need for experimental research to observe how shareholder activists adapt to each institutional change in CMEs. This experimentation can help policymakers to avoid creating additional conditions that shareholder activists can exploit. Research limitations/implications This focuses only on France and its state shareholdings. To generalize results, studies of other CMEs and state shareholders are needed. Practical implications Policymakers should consider all legislative proposals for their potential to deviate from corporate governance practice by experimenting with them in a laboratory setting. Shareholder activists can compare state shareholders’ actions against the state’s legislation to emphasize institutional contradictions that counter minority shareholders’ rights. Originality/value This research is the first to analyze how the state as shareholder can exploit its competing logics to resist against shareholder activism and support management or to become itself a shareholder activist.

Highlights

  • IntroductionLazard’s annual study reveals that in 2018, shareholder activists initiated 247 actions against 226 companies, up from 188 companies in 2017 (Lazard’s shareholder advisory group, 2019)

  • Shareholder activism is increasing, intensifying and internationalizing

  • The research objectives in this paper were to show the institutional contradictions of the French State shareholder and to determine how the government’s contradictions have encouraged shareholder activism in France

Read more

Summary

Introduction

Lazard’s annual study reveals that in 2018, shareholder activists initiated 247 actions against 226 companies, up from 188 companies in 2017 (Lazard’s shareholder advisory group, 2019). The greater their investment capacity grows in terms of billions of assets under management for hedge funds, the more that shareholder activists’ activity intensifies in the USA (Becht et al, 2010; Bebchuk et al, 2015) and in Europe (Bessler et al, 2015). Shareholder activism practices, originating in Liberal Market Economies (LMEs) such as the United Kingdom and the USA, with a common law tradition, are entering into Coordinated Market Economies (CMEs) such as France, Japan, China and Russia. CMEs typically have codified civil law and significant state regulation of financial markets, and the prospects for shareholder activism depend heavily on their legal and institutional environments (Hall and Soskice, 2001)

Objectives
Findings
Conclusion
Full Text
Paper version not known

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call

Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.