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18 - Board-Shareholder Engagement and Insider Regulation

Published online by Cambridge University Press:  31 August 2024

Luca Enriques
Affiliation:
University of Oxford
Giovanni Strampelli
Affiliation:
Università Commerciale Luigi Bocconi, Milan
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Summary

This chapter examines the impact of insider regulation on the board-shareholder dialogue. It offers a comparative analysis, revealing that EU and UK laws are more restrictive than those in the US. Drawing from this analysis, the paper raises the question of whether the EU should introduce a safe harbour rule to facilitate shareholder engagement through private disclosure of inside information. While shareholder engagement is considered beneficial for corporate governance and long-term firm value, the paper questions the necessity of selectively disclosing inside information to investors. It argues that mandating greater transparency in the board-shareholder dialogue is preferable, ensuring all shareholders have equal access to information. The feasibility and practicality of a safe harbour rule are doubted due to associated costs and challenges. In conclusion, the chapter rejects proposals to enact such rules, citing limited benefits and substantial costs.

Type
Chapter
Information
Board-Shareholder Dialogue
Policy Debate, Legal Constraints and Best Practices
, pp. 528 - 554
Publisher: Cambridge University Press
Print publication year: 2024

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