Power and shareholder saliency

Shareholder activism has had an impact on the way companies work, focusing the attention of managers on the environmental, social and governance standards (ESG) embedded in corporate decisions. However, not all shareholders receive the same attention from managers. In fact, there are studies showing that the existence of certain shareholder attributes are necessary for managers pay attention on their claims. It has been suggested that legitimacy is the strongest attribute associated with shareholder saliency, a claim that is backed by a considerable body of qualitative research. Our findings, based on quantitative analysis, suggest that power plays a key role in shareholder salience. Contrary to the assumption that minority shareholder resolutions are put forward when engagement between shareholders and company managers breaks down, we find that in the majority of instances where we have both shareholder engagement and one or more shareholder resolutions, that in fact the minority resolution proceeded the engagement and may well have been required in order to gain attention from the company. Despite claims to the contrary from investors and from corporate managers, it appears that shareholder power remains a key aspect in shareholder saliency. This paper goes on to ask if there is a greater chance of success in achieving the stated ESG goal with the company the dialogue occurred before the resolution was put forward rather than if the dialogue occurred after the resolution was put forward.