Shareholder Activism in Europe: A Rising Trend?

Abstract

This article discusses the rising trend of shareholder activism in Europe. It summarizes the empirical evidence on different levels of shareholder activism across the world and offers three potential explanations for the higher level of shareholder activism in the US compared to continental Europe. First, the omnipresence of controlling shareholders in continental Europe could explain why shareholder activism is relatively less common. Secondly, higher levels of some types of shareholder activism environmental, social and governance (such as ESG shareholder activism) in the US can be explained by differences in corporate laws, in particular the relatively low thresholds to file shareholder proposals in the US. On the other hand, higher levels other types of shareholder activism (such as hedge fund activism) are more difficult to explain by differences in corporate law between the US and continental Europe. Third, more activist-friendly securities laws in the US could also explain why shareholder activism is relatively more common in the US than in continental Europe. Because these three explanatory factors are unlikely to change soon, the article concludes that the rising trend of shareholder activism in Europe is unlikely to reach American levels. shareholder activism, engagement, ESG activism, comparative company law