Soft Shareholder Activism
نویسنده
چکیده
This paper studies voice and exit as mechanisms of shareholder activism when obtaining costly formal control is not feasible. Different from the existing literature, voice is interpreted as a strategic transmission of information from an activist investor to an opportunistic manager. The analysis provides several results. First, voice and exit exhibit complementarity, and hence, exit can be an effective form of governance even when managers are not myopic. Second, transparency reduces the credibility of the activist’s voice and thereby harms shareholders’welfare. Third, managerial myopia unambiguously benefit shareholders only if the activist can voice herself. Finally, voice can be effective even when the activist is biased, and sometimes, even more effective than when the activist is
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