Brief considerations on the effectiveness of shareholder activism. A virtue ethics approach.

Shareholder activists engage with companies in order to influence behaviour and to foster social responsibility (CSR). Although investor groups and regulators continue to see shareholder activism as key to building a healthy business system, research on the effectiveness of such activism to date is inconclusive. We may ask why practitioners continue to devote time and energy to activism if its results are uncertain, and suggest that the current answers to this question in the business literature are not convincing. We analyse the main lines of research on the effectiveness of shareholder activism to date, and suggest that one of the reasons for the mismatch between practitioner interest in activism and research results on its effectiveness is that researchers adopt an incomplete vision of what counts for success for shareholder activists, especially where socially-responsible investors are concerned. We propose that a virtue ethics perspective could provide a more complete picture of what is going on in the activist-business relationship