The Shareholder Movement: Shareholder Rights and Activism in 20th Century United States

Abstract

“The Shareholder Movement: Shareholder Rights and Activism in 20th Century United States” – the first sustained historical study of modern American shareholder activism – investigates the loose coalition of shareholder activists united around the ideal of shareholder democracy in the middle of the twentieth century. Beginning in the 1930s with individual shareholders, shareholder activists increasingly exercised their rights using new protections from the Securities and Exchange Commission to expand their role in corporate governance. These shareholders challenged managerial dominance, promoting shareholders as a source of democratic power and legitimacy. Individual shareholders were later joined by social activists and then social institutional shareholders including unions, pensions, churches, universities, and civil rights groups. I argue that shareholder democracy provided a unifying principle for the different groups of activists, aiding the Shareholder Movement’s success in the middle of the twentieth century. Further, commitment to democratic corporate governance gave the Shareholder Movement a sustained connection, transforming what might have been isolated protests into a coherent movement. Support for shareholder democracy linked together activists demanding better reporting and voting rights in the 1940s to those activists focusing on anti-Apartheid resolutions in the ‘70s and ‘80s. The Shareholder Movement’s success in the middle of the twentieth century showed the potential for shareholder democracy in corporate governance as an alternative to government regulation to managing corporate power. However, the success and increasing number of shareholder resolutions led to structural changes that halted the Shareholder Movement’s momentum. Beginning in the 1980s, a new emphasis on shareholder primacy led to a different class of shareholders aided by regulators that successfully narrowed shareholder activism and its role in corporate governance. Combined with the Shareholder Movement’s own limited connections, the push for shareholder democracy receded in the final quarter of the century.