Nathaniel McGrory: “Trading as ‘Voice’: How Ought Market Actions be Understood as Investor Stewardship within the UK Corporate Governance Regime?”

In Students by General Account


This project is about the various ways in which investors seek to influence how companies are run. Recent corporate scandals, for instance related to Carillion and Libor, and challenges presented by climate change, have intensified scrutiny on corporate governance as a problem for society, economy and law. Serious concerns have arisen in this context concerning the role that investors play in influencing corporate activities.

Corporate governance of large firms listed on UK stock exchanges is regulated through the UK Corporate Governance Code. The Code assumes accountability to investors as a driver of compliance. It relies on transparency from firms and on active investor engagement in return. Governance requires in other words investor stewardship: investors actively holding boards to account on their governance and strategy, largely through literal conversations between fund managers and company directors. A UK Stewardship Code regulates investors towards that engagement.

This project seeks to expand this approach to stewardship, however. This project will contribute to law and society scholarship by turning to trading (buying, selling, and short-selling shares) as a form of ‘voice’ in investors’ governance of corporations. How, the project will ask, does investor trading frame investor-board conversations in regulating governance?

The project will assemble an evidence base for testing the degree to which and how trading buttresses other forms of stewardship. Drawing on stewardship and other corporate reports, the project will code for and analyse investor engagement events (either conversational or trade based) and subsequent strategic governance changes.