Abstract
Shareholder activism in Korea, unlike that of the United States, which is mainly led by institutional investors, has been led almost exclusively by a nongovernmental organization (NGO) named People's Solidarity for Participatory Democracy (PSPD). Since the foremost objective of PSPD's shareholder activism is the reform of Chaebols through the improvement of its target companies' corporate governance, PSPD does not consider past financial or stock price performances when it selects its targets. Although we cannot perform rigorous econometric analysis because of very limited availability of appropriate data, PSPD's shareholder activism does not appear to have negative effects on the financial performances and shareholders' wealth of its target companies. In addition, the fact that PSPD's activism is less likely to achieve successful outcome than the activism in the United States suggests that incumbent managers and controlling shareholders of Chaebols are more insulated from the discipline by shareholders.
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