First of all, companies cannot live without a shareholder, even if it is public, except to consider that, in the absence of equity, the company is financed by bank debts or repayable advances, which means the same thing: the company depends on external financing to ensure its development, because its profits are in general insufficient to allow it in all independence. A small business may have just one shareholder, the founder, while a public company may have thousands of individual and institutional shareholders, such as pension funds, hedge fund or mutual fund companies. Shareholders are regularly pointed out for their willingness to influence, to their advantage, the management of companies. We will try to see through which channels they manage to influence the strategy of firms. Shareholders are trying to influence corporate strategy in their favor. The most spectacular events are the restructuring
Finally, the meeting can decide on own share buybacks. A company can indeed buy back its own shares in order to raise the price. If the company buys its own shares, there are fewer shares available on the market. Their price will therefore increase. This type of measure, which is similar to the destruction of capital, is often a signal to shareholders, who see their securities appreciate artificially. Shareholders may also exert indirect pressure on management. It involves financial communication and the assessments of financial analysts who act as signals sent to management and in the interest of the shareholder. Stock market law plays a decisive role in setting the standards of transparency that listed companies and investors must follow when trading securities. In addition, a group of agents, the gatekeepers, must ensure that investors are well informed: in the foreground, there are audit firms, responsible for certifying the accounts of companies, and financial analysts, responsible for advising investors on the advisability of selling or buying particular securities. It is hoped that prices will properly inform investors about the intrinsic value of companies. \” Auditors, analysts, and rating agencies have indeed been propelled \”guarantors\” of the good information of the stock market. They influence investors\’ decisions by providing advice on buying or selling securities. But analysts also have an influence on the management of companies. As several studies suggest, long-term investment decisions, investing in R & D, or the ability to innovate for a business seem to diminish as the number of financial analysts who follow the firm increases. By publishing recommendations or ratings, it is the management of companies that is evaluated by the financial analysts, and through it its managers. The safeguards of finance thus allow an influence on the strategies and organizational policies of companies by the publication of financial indicators – such as the Economic Value Aded – which ultimately reflect more the ability of the firm to create shareholder value than its real health in the medium-long term. Thus, the mode of influence of institutional shareholders could be described as \”solicitation-delegation\” insofar as the principle of delegation is maintained. In fact, the institutional shareholders do not claim to manage directors instead and maintain the division of tasks, but they constantly request the latter by communicating their own analysis of the situation. Without formally imposing, they indicate to the leaders strategic and organizational orientations that seem acceptable to them. Rather than a power of injunction, this is a power of suggestion. Shareholders therefore have a wide range of tools at their disposal. The majority of them are not directly involved in business management, and prefer to \”vote with their feet\” in the event of disagreement with management. The shareholder sells or threatens to sell his shares. A threat that targets the company leader: in fact, in the event of a massive sale of shares, the stock market price may decrease, which increases the probability of a buyout of the company (since its market value has decreases). When buying a business, the management team is almost always replaced. The vote with the feet is therefore a signal sent to the management so that it modifies its strategy.