Critically evaluate the statement

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Reference no: EM133378603

Question: "The potential for shareholder activism arises when shareholders believe that the Board of Directors has failed in its duty, that is, they are dissatisfied with the performance of the Board of Directors (and presumably the firm). In such a case, shareholders have three choices: sell their shares, that is, 'vote with their feet', hold their shares and voice their dissatisfaction, or hold their shares and do nothing".

Gillan, S.L. and Starks, L.T., (1998) "A Survey of Shareholder Activism: Motivation and Empirical Evidence", Contemporary Finance Digest, Vol. 2, 10-34

Required

Critically evaluate the above statement, particularly concentrating on the motivations and the outcomes of shareholder activism and whether activism improves corporate governance of the investee firms or not.

Reference no: EM133378603

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