In an era when corporate responsibility has increasingly come into the spotlight, shareholder activism is gaining importance and attention. In particular, equipped with the Securities Exchange Act of 1934, shareholders can call for fellow investors to vote on certain demands made of a firm’s management and board of directors.
Researchers have suggested that this type of shareholder activism has the potential to effectively facilitate changes in firms’ policies, strategy, and governance structure.
Conversely, the act allows companies to appeal to the Securities and Exchange Commission (SEC) in an attempt to prevent proposals from appearing on the firm’s proxy statements, which set the agenda for annual shareholder meetings.
