Forcing Shareholder Engagement: Theoretical Underpinning and Political Ambitions

This paper explores the post-crisis debate on shareholder engagement and argues that the debate and subsequent legislative initiatives aimed at increasing shareholder engagement and accountability seem to be moving away from the traditional corporate governance basis. While corporate governance theory may explain the need for shareholders to balance management powers, it does not support that shareholders have an obligation to engage in investee companies. Neither do we find that the ownership rhetoric supports any duties for shareholders. Finally, we examine elements of stakeholder theory and public policy theory. While these theories emphasise that companies should include other interests than shareholders' financial interests, they do not support a stronger shareholder role in that respect. Thus, the paper concludes that the post-crisis debate on shareholder engagement should be seen as the result of a strong political agenda and that the theoretical basis for pushing shareholder engagement further is weak.