Collective Action and Governance Activism

Craig Doidge, Alexander Dyck, Hamed Mahmudi, Aazam Virani

Research output: Contribution to journalArticlepeer-review

8 Scopus citations


We examine how an investor collective action organization (ICAO) enhances activism by institutional investors. The ICAO initiated a new form of engagement - private meetings with independent directors to discuss governance proposals. Compared with a single investor acting alone, the ICAO has stronger incentives to engage in activism. Its dollar holdings and voting power are six times larger and predict direct access to the board and the firms it engages. Firms engaged by the ICAO are at least 58% more likely than non-engaged firms to adopt the ICAO's governance proposals that include adoption of majority voting, say-on-pay, and specific compensation policies. Engaged firms also increase CEO incentive pay. An event study around the announcement of the ICAO's formation shows a positive impact on value that increases in both dollar holdings and voting power. We conclude that institutional investors improve governance outcomes through collective action.

Original languageEnglish (US)
Pages (from-to)893-933
Number of pages41
JournalReview of Finance
Issue number5
StatePublished - Sep 1 2019
Externally publishedYes


  • Collective action
  • Corporate governance
  • G23
  • G34
  • Institutional investor activism

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


Dive into the research topics of 'Collective Action and Governance Activism'. Together they form a unique fingerprint.

Cite this