Investor Stewardship Codes and the Rise of Global Shareholder Activism

We find a rise in shareholder activism following the adoption of Investor Stewardship Codes (ISCs). Using the staggered adoption of ISC across twelve countries, we find that after ISC adoption, the number of public demands made by investors increases twofold. The increase starts in the year of adoption and continues over the subsequent three years, suggesting learning effects. The effects are greater when the adoption is led by investors rather than regulators. Investor demands made after ISC adoption are more likely to be successfully implemented but only when they are made by domestic, not foreign, investors. We also find increased activism through shareholder voting. Following ISC adoption, investors are more likely to vote and to support shareholder proposals. The increase in support votes is more prominent when the shareholder proposals are filed by institutions (as opposed to individuals) and supported by proxy advisors. However, we find no evidence that investors vote more against management proposals after ISC adoption. The findings suggest that global ISC adoption contributes to a changing landscape of shareholder activism around the world.