Speaking With One Voice: Shareholder Collaboration on Activism

I study how an activist shareholder organizes a cost-sharing coalition with active shareholders while seeking support from passive shareholders outside the coalition. A larger coalition shifts more of the campaign cost to members, allowing the activist to pursue lower-value proposals. Observing a larger coalition therefore lowers passive shareholders’ posterior expectation of proposal value. The activist chooses the largest coalition that preserves support from pivotal passive shareholders, endogenizing coalition size. Consequently, coalition size need not be a monotone measure of activist influence, and activism frequency depends on passive shareholders’ preferences. Coalition building strengthens the proxy-fight threat and can increase prevote settlements. (JEL G34, G23, D83)