Dueling Conflicts: Does Empowering Shareholders Always Increase Value? A Skeptical Perspective

Corporate governance reformers advocating "shareholder democracy" seek to reform proxy voting rules and other governance practices in the interests of improving shareholder control over companies and lessening the agency problem between corporate management and stockholders. This view, however, ignores the conflict that exists between the institutional investors who manage large investments in corporate stock and their principals (e.g., pension holders who are the ultimate owners of the investments managed by pension funds).