When Shareholder Engagement Hurts More Than It Helps

"As shareholder groups grow more diverse and dispersed-whether in family firms, co-owned private companies, or scaling startups-leaders often obsess over shareholder engagement."

"The assumption seems straightforward: When managers and shareholders are more engaged, both sides will show increased commitment, more alignment on the best use of resources, and more constructive contributions."

Shareholder groups are becoming more diverse and geographically dispersed across family firms, co-owned private companies, and scaling startups. Leaders frequently focus intensely on shareholder engagement to manage this complexity. The prevailing assumption holds that increased engagement between managers and shareholders will raise both parties' commitment and foster stronger alignment on priorities. Greater engagement is expected to improve decisions about the best use of resources and to generate more constructive contributions from shareholders. This belief informs governance and communication strategies aimed at integrating dispersed ownership and coordinating management and owner objectives.

Read at Harvard Business Review