When shareholders become dissatisfied with a public company’s policies or actions, they
may resort to activist interventions. Shareholder activism has been described as an attempt to
resolve agency conflicts by directly influencing management or board decisions. Shareholder
activism may be incited by a lack of focus on shareholder value, a misalignment of corporate
governance, or a number of social and environmental policy issues. Over recent years, shareholder activism has become more frequent, professional, and costly to corporations. Large, visible companies are held to be most susceptible to activist interventions, potentially damaging their corporation reputation. In this study, we analyze the effect of a good corporate reputation on the susceptibility of public companies to shareholder interventions in the form of
proxy fights. We consider both the frequency and success of shareholder proposals and differentiate the effect of corporate reputation by issues context. Our findings indicate that a good corporate reputation serves as a two-fold inoculation against shareholder interventions, reducing both the frequency and success of proxy fights.