in which companies can be more effectively scrutinised in their pursuit of risky activities.
However, allowing them to remain free to maintain and sustain their economic viability
(Kate, 2010). The question has thus been raised, “Can shareholder empowerment be
considered an effective meansto regulate corporateactivities?”.
In fact, the ﬁnancial crisis originatedin 2007-2008 has been characterised as the result of
“untrammelled managerial power”, the lack of risky behaviour regulation and undertaking
of unsound corporate activities by boards of directors(John, 2008) and the populist political
response to articulate arguments in favour of greater powers for shareholders (Hill, 2010).
This crisis has stimulated a debate on corporate governance and the primacy of
shareholders empowerment value (Mukwiri and Siems, 2014). Indeed, the debate raised
issues such as the question whether shareholders ought to be further empowered to have a
greater inﬂuence over the companies’activities. Thus, the intuitive reason for the topicality
of shareholder empowerment is that the latest economic crisishas given momentum to the
contention that shareholders empowerment represents the most effective means to
scrutinise corporate activities. Consequently, it has emphasised creating a new legal
framework for regulating commercial activities which is oriented towards providing
shareholders withgreater powers of control (Bratton and Wachter, 2010).
Hence, Bebchuk (2003,2005,2006 and 2007) argued extensively that the shareholders
should enjoy the “powerto initiate, and approve by vote, major corporate decisions.”Onthis
basis alone, one is inclined towards the conclusion that arguments for shareholder
empowerment are likely to be “convincing”in the wake of the crisis (Hill et al.,2012).
However, contrary to Bebchuk’s view, some arguments have been put forward against
providing shareholders with greater powers. One of the principal arguments expressed
against greater shareholder powers is that strengthening the powers of shareholders is
contrary to the entrenched corporate legal frameworks which draw a clear distinction
between the owners of a company and the company’s management(Stephen, 2006). Thus, a
distinction between discussions of shareholder empowerment in theory and practice needs
to be made.
In addition, ideally, shareholder empowerment might ensure better monitoring of
management and therefore better-run company corporate activities (Mukwiri and Siems,
2014). Yet, it is not self-evident that shareholder empowerment has such a difference in
corporate outcomes and such a positive effect. It is prudent at this point to consider the
developments of arguments in favour of shareholder empowerment in some depth.
Subsequently, a critical analysis of shareholder empowerment is therefore essential. In
particular, Bebchuk’s academic work concerning empowering the shareholders will be
On this basis, while shareholders empowerment is capable of controlling management
behaviour (Kraakman et al.,2009), an unexplored area is whether shareholders
empowerment is capable of regulating corporate activities. Therefore, the purpose of this
paper is to go further than existing research by assessing whether shareholders
empowerment can be considered an effective means to regulate corporate activities.
Accordingly, it must be noted that the assessment of effectiveness will be inevitably
involved by considering the difference between the theory of shareholders empowerment
and the practical realitiesof shareholders empowerment.
The present article has the objectivesof ﬁlling a gap in the literature and conceptualising
more coherently the question of shareholders’empowerment primacy value.As shareholder
empowerment represents one of an array of controls that can inﬂuence management
decisions within a company the hypothesis to be explored is whether shareholder
empowerment can represent a way to go further than simply inﬂuencing management