In a new paper, we ask whether social media could have a role in corporate governance. Prior to the advent of social media, a small shareholder faced prohibitive costs to reach other investors. For example, she would have had to obtain the shareholder lists, which the firm might have only reluctantly made available, and to pay for printing, postage and more, if a proxy solicitation firm were hired. These costs and the prospect that others would simply free ride on these efforts effectively discouraged small shareholders from playing any meaningful role in corporate governance.
The rise of social media, in … Read more