Christoph Van der Elst

The long-term shareholder versus the engaged shareholder

WP 2022-20

According to the European Commission it is of importance to build a long-term relationship between the shareholders and their investees because so-called short-termism is endangering the capital market. The Commision endorses «long-term engaged share ownership under which shareholders effectively hold the board accountable for its actions». Both companies as well as many of their investors, report (extensively) about their relationships and contacts. However, this information addresses the current relationship between these parties. Little is known whether and which shareholders effectively develop a long-term relationship with the company. Neither is much known whether the behavior of “long-term” investors differs from short-term investors. In this paper I analyze whether institutional investors make use of a “buy and hold” practice or apply a “hit and run policy” in large Belgian companies. Second, I study whether the voting behavior of the different types of investors (short and long(er)-term investors) differs.