Shareholder activism of Swedish institutional investors

Sammanfattning: During recent decades, institutional investors have come to be of larger significance in the ownership structures of large Swedish corporations. Yet, studies of their actual involvement in the running of corporations remain limited. Therefore, the purpose of the study is to explore and explain how Swedish institutional investors engage in shareholder activism in portfolio corporations. More specifically, the study seeks to investigate three main areas of shareholder activism: investors’ aims and goals, their concrete exercise of shareholder activism and, finally, how relations between investors and other actors influence shareholder activism.The mainstream approach to institutional investors and shareholder activism is characterised by deductive modelling and it’s predominantly quantitative approach, where correlations between performance variables and degrees or concentration of institutional ownership is the dominant approach to investigating shareholder activism.The present study adopts an alternative approach; whereas mainstream approaches rely on strong assumptions on behaviour and market characteristics, the present study seeks to investigate those assumptions empirically. Thus, by grounding the study in a theoretical framework inspired by institutional sociology, I seek to outline and comprehend the decision-making and contextual influences thereon. Thereby, the study seeks to address the ways in which institutional sociology replace or complement economic approaches to shareholder activism.The findings show that large institutional investors exert shareholder activism, and that the lion’s part is exerted through informal discussion with management of portfolio corporations, or between investors in temporary coalitions. This exertion is influenced by contextual expectations, values and regulations. Such institutional pressures are often contradictory in their prescription, which in turn requires strategic choices by the investors. In a broader theoretical perspective, the study also shows institutional sociology is an important complement to economic explanations of shareholder activism.