Research articles for the 2020-01-06

A Note on Portfolio Optimization with Quadratic Transaction Costs
Pierre Chen,Edmond Lezmi,Thierry Roncalli,Jiali Xu
arXiv

In this short note, we consider mean-variance optimized portfolios with transaction costs. We show that introducing quadratic transaction costs makes the optimization problem more difficult than using linear transaction costs. The reason lies in the specification of the budget constraint, which is no longer linear. We provide numerical algorithms for solving this issue and illustrate how transaction costs may considerably impact the expected returns of optimized portfolios.



A Socioeconomic Well-Being Index
A. Alexandre Trindade,Abootaleb Shirvani,Xiaohan Ma
arXiv

An annual well-being index constructed from thirteen socioeconomic factors is proposed in order to dynamically measure the mood of the US citizenry. Econometric models are fitted to the log-returns of the index in order to quantify its tail risk and perform option pricing and risk budgeting. By providing a statistically sound assessment of socioeconomic content, the index is consistent with rational finance theory, enabling the construction and valuation of insurance-type financial instruments to serve as contracts written against it. Endogenously, the VXO volatility measure of the stock market appears to be the greatest contributor to tail risk. Exogenously, "stress-testing" the index against the politically important factors of trade imbalance and legal immigration, quantify the systemic risk. For probability levels in the range of 5% to 10%, values of trade below these thresholds are associated with larger downward movements of the index than for immigration at the same level. The main intent of the index is to provide early-warning for negative changes in the mood of citizens, thus alerting policy makers and private agents to potential future market downturns.



Bank Representatives on the Board of Directors and their Influence on Risk and Managerial Compensation
Kronenberger, Sandra,Weiskirchner-Merten, Katrin
SSRN
This paper examines the role of bank representatives on the firm’s board of directors and their influence on risk and managerial compensation. After the firm has taken on debt for a big-scale lump-sum investment project, the bank representatives are inclined to lower the project risk, which is contrary to the shareholder’s interests of taking on more risk. However, higher risk increases the expected managerial compensation. We use a one period discrete model to show that the bank representatives on the board can become beneficial from the shareholders’ perspective. This benefit occurs because the bank representatives on the board act as a commitment device for the board to implement less risk, which results in lower expected managerial compensation. The model predicts that shareholders benefit from bank representatives on the board of directors when they expect low project profitability.

Blockchain Startups and Prospectus Regulation
Boreiko, Dmitri,Ferrarini, Guido ,Giudici, Paolo
SSRN
ICOs are a new way for blockchain startups to finance project development by issuing coins or tokens in exchange for fiat money or Bitcoin or other cryptocurrencies. In this article, we start from the current distinction between different types of tokens and argue that it can create confusion and should be at least partially abandoned. We believe that the conceptual difference between a currency token and a tradable utility token is just the dimension of the crypto environment in which the token is spent. More specifically, ‘utility tokens’ combine the customer payment mechanism with the utility component and, when tradable on a secondary market, the investment one. We argue that they blur the traditional distinctions between currencies, financial assets and consumption goods. Moreover, we stress the increasing importance of online crypto exchanges. Recently some exchanges also took up the role of a trusted intermediaries and staked their reputation on token offerings, which are termed initial exchange offerings (IEOs) and have gained in popularity. We argue therefore that the crypto market increasingly looks like a segment of the capital market and behaves as such. Given that tokens have a clear investment component, we show that they are tradable securities under the Prospectus Regulation (PR). We compare the European securities regulation with its US counterpart and focus on prospectus exemptions, highlighting the great differences between Europe and the US which make Europe less amicable to blockchain startups.

Cajas de Ahorros españolas: Crónica de una muerte súbita (The Spanish Savings and Loan Sector, Chronicle of a Sudden Death)
Quintás-Seoane, Juan-Ramón
SSRN
Spanish Abstract: Durante casi dos siglos, a lo largo de los cuales alcanzaron una cuota de mercado del 50% del sistema bancario, las Cajas de Ahorros españolas habían demostrado una resiliencia muy superior a la de los bancos, sin que hasta la reciente crisis global de 2008 jamás hubieran necesitado la ayuda del dinero público. Por ello, es muy sorprendente constatar que ahora, en un brevísimo periodo de tiempo (años 2010 y 2011), las Cajas hayan desaparecido como sector y que, además, su extinción se produzca con un enorme costo de recursos públicos. Explicar cómo esto ha sido posible es el objetivo central de las tres primeras partes de este trabajo, en las que se concluye que:1. Hay una causa remota: la inoculación en 1985 de la politización mediante la Ley de Ã"rganos Rectores de las Cajas de Ahorros (LORCA). La colonización de las Cajas de Ahorros por los políticos se desarrolla rápidamente desde entonces, gracias a la elaboración por los gobiernos y parlamentos regionales (las Comunidades Autónomas) de los correspondientes Estatutos de Autonomía. 2. La causa próxima fueron las malas prácticas de gobierno corporativo de muchas Cajas de Ahorros, derivadas principalmente de aquella colonización política y frecuentemente estimuladas por el notable activismo de promotores inmobiliarios y otros “emprendedores” regionales.3. Reguladores y supervisores, incluyendo a los sucesivos gobiernos de España y de las Comunidades Autónomas, junto con el Banco de España, son los cooperadores necesarios en la gestación y evolución de la crisis, merced a malas prácticas, errores de estrategia y, muy especialmente, en razón de sus letales retrasos en la aplicación de las adecuadas medidas correctoras.4. Una crisis económica global, de duración, evolución e intensidad excepcionales, actuó como detonante y catalizador de todo el proceso.La cuarta y última parte del artículo se dedica al análisis de las consecuencias de la casi total desaparición de las Cajas de Ahorros en el sistema financiero español:Tras el comentario de su enorme costo total en recursos públicos y privados, se recuerda otro costo, más sutil pero también muy importante. En efecto:• La concentración bancaria ha aumentado notablemente, al disminuir en casi un tercio el número de competidores a lo largo de los últimos años, elevando fuertemente la ratio de concentración del sector, al tiempo que es muy probable que en el futuro dicha ratio siga aumentando.• La diversidad institucional ha sido severamente reducida por la supresión de un sector que representaba nada menos que la mitad del antiguo sistema bancario. Con ello el sistema bancario español distancia su estructura de la que caracteriza a muchos sistemas bancarios europeos que exhiben una estructura más plural y que, a juicio de varios analistas, obtienen significativas ventajas de su mayor diversificación.• Con la extinción del sector de Cajas de Ahorros también se ha puesto en riesgo de desaparición un gran vector de responsabilidad social en el sistema financiero español, al elevar los riesgos tanto de exclusión financiera de los segmentos más modestos de la población, como de desaparición de la potente obra social que las viejas Cajas realizaban con cargo a sus beneficios. Es confortador observar que tal peligro no ha llegado a materializarse completamente gracias a la conducta de los bancos surgidos de las antiguas Cajas de Ahorros, e integrados en CECA (Confederación Española de Cajas de Ahorros).En efecto, estos nuevos bancos se identifican con la triple dimensión que caracterizaba en buena medida a sus antecesoras, las Cajas de Ahorros: negocio minorista, socialmente responsables y arraigo territorial. El apego a estos tres criterios parece asegurado, incluso en el largo plazo, por su fuerte penetración en la cultura empresarial de aquellos nuevos bancos. Por tal motivo, continúa siendo extraordinariamente importante la inversión social realizada por las entidades miembros de CECA, que hacen de esta el primer inversor social privado de España. Con ello, la obra social puede seguir siendo seña de identidad de las entidades financieras afiliadas a CECA.English Abstract: For almost two centuries, during which time they managed to reach a market share of 50% of the banking system, the Spanish Cajas de Ahorros (Spanish Savings Banks) demonstrated great resilience. Unlike their bank peers, they had never required public funds before the global financial crisis of 2008.Therefore, it is very surprising to see how, in a very short period of time (2010 and 2011), the Cajas disappeared as a sector and with a huge cost in terms of public resources. Explaining how this has been possible is the central objective of the first three parts of this study, which concludes that:1. There is a remote cause: the Law on the Governing Bodies of Savings Banks (LORCA), which opened the way to politicizing the hitherto independent Cajas. The colonization by politicians then followed rapidly, assisted by the different regional governments (Comunidades Autonomas) as they developed their recently enacted Statues of Autonomy.2. The proximate cause, in turn, can be found in the bad corporate governance practices of many of the Cajas. These mainly resulted from their progressive politicization and were frequently stimulated by the remarkable activism of real estate developers and other regional “entrepreneurs”.3. Regulators and supervisors, including the successive governments of Spain and of the Comunidades Autonomas, together with the Bank of Spain, were effectively the accomplices in the gestation and evolution of the crisis, thanks to their bad practices, their strategy errors and, very especially, the fatal delays in their application of the appropriate corrective measures.4. A global economic crisis, of exceptional duration, evolution and intensity, acted as trigger and catalyst of the whole process.The fourth and final part of the study is devoted to the analysis of the consequences of the almost total disappearance of the Cajas in the Spanish financial system:After discussing the enormous total cost in terms of both public and private capital, other important types of cost that resulted from the disappearance of the Cajas sector are also explored. While perhaps being more subtle than the monetary costs previously discussed, their effects nonetheless still reverberate to this day:• Banking concentration has increased markedly, with the number of competitors decreasing by almost a third in recent years. Furthermore, it is very likely that this ratio will continue to increase in the future.• Institutional diversity has been severely impaired, by suppressing a sector that represented more than half of the old banking system. With this, the structure of the Spanish banking system has distanced itself from many other European banking systems, which exhibit a more plural structure and, in the opinion of several analysts, enjoy significant advantages from their higher level of diversification.• With the extinction of the Cajas sector, a large vector of social responsibility in the Spanish financial system has also been put at high risk of disappearance, from two perspectives: on the one hand, by raising the risk of financial exclusion for sectors of the population; and, on the other, by hindering the powerful social work previously funded by the Cajas. It is comforting to note that this risk has not fully materialized thanks to the new banking entities that many of the old Cajas converted into, and which remain integrated into CECA (Spanish Confederation of Savings Banks).In effect, these new banking entities have chosen to identify with the triple dimension that largely characterized their former selves: being retail-focused businesses, being socially responsible and having solid territorial roots. The attachment to these three criteria seems assured, even in the long term, for they have remained deeply entrenched in the business culture of these new banks.As a result, the social investment made by the new entities comprising CECA continues to be extraordinarily important, making them the largest private social investor in Spain. With this, social responsibility can indeed continue to be the hallmark of the financial entities affiliated with CECA.

Christianity and Bankruptcy
Skeel, David A.
SSRN
Although the term “bankruptcy” is nowhere to be found in the Bible, debt and the consequences of default are a major theme both in the Hebrew Bible and in the New Testament. In Israel, as in the ancient Near East generally, a debtor who defaulted on his obligations was often sold into slavery or servitude. Biblical law moderated the harshness of this system by prohibiting Israelites from charging interest on loans to one another, thus diminishing the risk of default, and by requiring the release of slaves after seven years of service. Jesus alluded to the lending laws at least once, and he frequently used economic illustrations in his teaching, linking forgiveness of sins to debt relief in the Lord’s Prayer and in one of his parables.In this essay, I very briefly describe the evolution of bankruptcy, focusing most extensively on a proposal by the early novelist Daniel DeFoe to reform English insolvency law. I then turn to the essay’s principal focus: the implications of Biblical teaching on debt and debt relief for modern bankruptcy law, especially American bankruptcy law. The past century has seen a significant expansion of personal bankruptcy law, the emergence of corporate bankruptcy, and most recently a debate over whether over-indebted countries should have access to bankruptcy relief. I consider whether each of these developments can be seen as reflecting Christian principles, and what a more fully Christian vision of bankruptcy law might look like.

Circus Ring to Zoo to Museum: The Fragility of Factors in Characteristic-based Asset Pricing Models
Abhyankar, Abhay,Wu, Yudi
SSRN
Economically relevant factors in asset pricing models should impound information on the future path of state variables that drive asset risk premia. Imposing this condition, we investigate which publicly available characteristics predict individual stock returns during the sample period used by Fama and French (1993) i.e. their discovery period and the post-1993 or out-of-sample period. We find four characteristics have significant predictive power, in the cross-section, over and above that of their factors. In the out-of-sample period, five new characteristics become significant predictors. Similar results are seen for the Chen and Zhang (2010) model. Next, we find that characteristics that forecast stock returns before and after major economic events are very different. Finally, we find that the ability of characteristics to reflect economic uncertainty and sentiment changes in sign and magnitude over time- often vanishing altogether. Our results suggest that the search for a unique characteristic-based asset pricing model is unlikely to be fruitful given the secular variation in the relation between the sources of macroeconomic risks and firm-level characteristics.

Classifying ecosystem disservices and comparing their effects with ecosystem services in Beijing, China
Shuyao Wu,Jiao Huang,Shuangcheng Li
arXiv

To completely understand the effects of urban ecosystems, the effects of ecosystem disservices should be considered along with the ecosystem services and require more research attention. In this study, we tried to better understand its formation through the use of cascade flowchart and classification systems and compare their effects with ecosystem services. It is vitally important to differentiate final and intermediate ecosystem disservices for understanding the negative effects of the ecosystem on human well-being. The proposed functional classification of EDS (i.e. provisioning, regulating and cultural EDS) should also help better bridging EDS and ES studies. In addition, we used Beijing as a case study area to value the EDS caused by urban ecosystems and compare the findings with ES values. The results suggested that although EDS caused great financial loss the potential economic gain from ecosystem services still significantly outweigh the loss. Our study only sheds light on valuating the net effects of urban ecosystems. In the future, we believe that EDS valuation should be at least equally considered in ecosystem valuation studies to create more comprehensive and sustainable development policies, land use proposals and management plans.



Corporate Social Responsibility Reports of European Banks â€" An Empirical Analysis of the Disclosure Quality and its Determinants
Loew, Edgar,Klein, Deborah,Pavicevac, Adrian
SSRN
Banks are crucial enablers of financial and economic development. They have an immense corporate social responsibility (CSR) towards society. Bank´s CSR activities are considered increasingly vital for their own success and sustainable growth, especially as they operate in a business environment with multiple stakeholder demands and an increasing awareness of CSR. In 2014, an CSR-Directive was established. The ultimate aim of the Directive is to encourage a more sustainable economy by strengthening both the comparability and relevance of non-financial information disclosure across the European Union (EU). The Directive was required to be adopted by banks and other companies for financial year 2017. This study analyses the quality of the CSR information discloses by 76 banks in the European Monetary Union (EM) in the years 2017 and 2018. To assess the quality of the reported information a disclosure index study was conducted. Furthermore, an OLS regression was performed to test seven hypotheses concerning the relationship between the extend of the banks´ CSR reporting and size, profitability, common equity tier 1 (CET1) ratio, number of pages containing CSR information, ownership type, availability of an external audit, and communication channel used. In addition, the banks´ reported commitments to the Sustainable Development Goals (SGDs) are presented, and the disclosed information on the extent to which climate-change related risks are integrated in the banks´ risk management framework for lending activities are addressed.

Data driven partition-of-unity copulas with applications to risk management
Dietmar Pfeifer,Andreas Mändle,Olena Ragulina
arXiv

We present a constructive and self-contained approach to data driven general partition-of-unity copulas that were recently introduced in the literature. In particular, we consider Bernstein-, negative binomial and Poisson copulas and present a solution to the problem of fitting such copulas to highly asymmetric data.



Disentangling shock diffusion on complex networks: Identification through graph planarity
Sudarshan Kumar,Tiziana Di Matteo,Anindya S. Chakrabarti
arXiv

Large scale networks delineating collective dynamics often exhibit cascading failures across nodes leading to a system-wide collapse. Prominent examples of such phenomena would include collapse on financial and economic networks. Intertwined nature of the dynamics of nodes in such network makes it difficult to disentangle the source and destination of a shock that percolates through the network, a property known as reflexivity. In this article, a novel methodology is proposed which combines vector autoregression model with an unique identification restrictions obtained from the topological structure of the network to uniquely characterize cascades. In particular, we show that planarity of the network allows us to statistically estimate a dynamical process consistent with the observed network and thereby uniquely identify a path for shock propagation from any chosen epicenter to all other nodes in the network. We analyze the distress propagation mechanism in closed loops giving rise to a detailed picture of the effect of feedback loops in transmitting shocks. We show usefulness and applications of the algorithm in two networks with dynamics at different time-scales: worldwide GDP growth network and stock network. In both cases, we observe that the model predicts the impact of the shocks emanating from the US would be concentrated within the cluster of developed countries and the developing countries show very muted response, which is consistent with empirical observations over the past decade.



Empirical Evidence on the Existence of Calendar Anomalies in the Market for Gold and Crude Oil
Jain, Vaishali
SSRN
This study is done with a purpose to explore and provide evidence about the existence of calendar anomalies in the market for gold and crude oil in India. Ordinary least square regression analysis is used to examine the presence of day of the week, turn of the year and turn of the month effects and to test the efficiency of the gold and crude oil market. The characteristics of returns are compared over different periods to draw inferences. The study has implications for both traders and investors who try to earn excess profits by timing their positions in certain assets based on the calendar anomalies. Potential investors and hedgers can take their positions and design their portfolio in the two assets using the insights provided by this piece of work.

Finance Without Brownian Motions: An Introduction To Simplified Stochastic Calculus
Aleš Černý,Johannes Ruf
arXiv

The paper introduces a simple way of recording and manipulating general stochastic processes without explicit reference to a probability measure. In the new calculus, operations traditionally presented in a measure-specific way are instead captured by tracing the behaviour of jumps (also when no jumps are physically present). The calculus is fail-safe in that, under minimal assumptions, all informal calculations yield mathematically well-defined stochastic processes. The calculus is also intuitive as it allows the user to pretend all jumps are of compound Poisson type. The new calculus is very effective when it comes to computing drifts and expected values that possibly involve a change of measure. Such drift calculations yield, for example, partial integro-differential equations, Hamilton-Jacobi-Bellman equations, Feynman-Kac formulae, or exponential moments needed in numerous applications. We provide several illustrations of the new technique, among them a novel result on the Margrabe option to exchange one defaultable asset for another.



Financial Flows Centrality: Empirical Evidence using Bilateral Capital Flows
Mercado, Rogelio,Noviantie, Shanty
SSRN
This paper uses a dataset on bilateral capital flows to construct a financial centrality measure for 64 advanced and emerging economies from 2000-16 to capture an economy’s importance within the global financial flows network. The results highlight the varying significance of network systemic and idiosyncratic factors in explaining financial centrality across different types of investments and residency of investors. Most notably, the findings show that financial centres have deeper and more developed financial system, implying their importance in global financial intermediation.

Financial Risk and Performance of Small and Medium Enterprises in Nigeria
Offiong, Amenawo,Udoka, Chris O.,Bassey, James Godwin
SSRN
Small and medium enterprises (SMEs) are imperative for the growth of a striving economy because they cater for a huge level of manpower and vast resources. Therefore, it is essential that their stability and performance should be ensured in order to pro- mote the economic growth of Nigeria. SMEs are pronged to unsecured financial risk, which can lead to the collapse of the enterprises. Various studies have been done on the small and medium enterprises’ contribution to the Nigerian economic growth, but only few have addressed how financial risks affect it. This study aims to investigate how financial risk affects SMEs` performance. In other to achieve this exploratory research design was used and data were sourced from Central Bank of Nigeria (CBN) statistical bulletin from 1986 to 2017. The study uses auto-regressive distributed lag (ARDL) techniques as the tool of analysis. It reveals a negative and insignificant relationship between financial risk and SMEs` performance in Nigeria in the long run. However, exchange rate risk, liquidity risk, interest rate risk and inflation risk have a significant, but negative impact on small and medium enterprises in the short run, as well as the long run. Financial risk adversely affects the performance of Nigerian SMEs and, there- fore, should be controlled to enhance their performance.

Forecasting Bitcoin closing price series using linear regression and neural networks models
Nicola Uras,Lodovica Marchesi,Michele Marchesi,Roberto Tonelli
arXiv

This paper studies how to forecast daily closing price series of Bitcoin, using data on prices and volumes of prior days. Bitcoin price behaviour is still largely unexplored, presenting new opportunities. We compared our results with two modern works on Bitcoin prices forecasting and with a well-known recent paper that uses Intel, National Bank shares and Microsoft daily NASDAQ closing prices spanning a 3-year interval. We followed different approaches in parallel, implementing both statistical techniques and machine learning algorithms. The SLR model for univariate series forecast uses only closing prices, whereas the MLR model for multivariate series uses both price and volume data. We applied the ADF -Test to these series, which resulted to be indistinguishable from a random walk. We also used two artificial neural networks: MLP and LSTM. We then partitioned the dataset into shorter sequences, representing different price regimes, obtaining best result using more than one previous price, thus confirming our regime hypothesis. All the models were evaluated in terms of MAPE and relativeRMSE. They performed well, and were overall better than those obtained in the benchmarks. Based on the results, it was possible to demonstrate the efficacy of the proposed methodology and its contribution to the state-of-the-art.



Hedging problems for Asian options with transactions costs
Serguei Pergamenchtchikov,Alena Shishkova
arXiv

In this paper, we consider the problem of hedging Asian options in financial markets with transaction costs. For this, we use the asymptotic hedging approach. The main task of asymptotic hedging in financial markets with transaction costs is to prove the probability convergence of the terminal value of the investment portfolio to the payment function when the number of portfolio revisions tends to be $n$ to infinity. In practice, this means that the investor, using such a strategy, is able to compensation payments for all financial transactions, even if their number increases unlimitedly.



Housing Investment, Stock Market Participation and Household Portfolio choice: Evidence from China's Urban Areas
Huirong Liu
arXiv

This paper employs the survey data of CHFS (2013) to investigate the impact of housing investment on household stock market participation and portfolio choice. The results show that larger housing investment encourages the household participation in the stock market, but reduces the proportion of their stockholding. The above conclusion remains true even when the endogeneity problem is controlled with risk attitude classification, Heckman model test and subsample regression. This study shows that the growth in the housing market will not lead to stock market development because of lack of household financial literacy and the low expected yield on stock market.



Simulated Greeks for American Options
Letourneau, Pascal,Stentoft, Lars
SSRN
This paper considers estimation of price sensitivities, so-called Greeks, for American style options using flexible simulation methods combined with initial dispersed state variables. The asymptotic properties of the estimators are studied and convergence of the method is established under mild regularity conditions. A 2-step method is proposed with an adaptive choice of optimal initially dispersed state variables, that controls and balances off the bias of the estimates against their variance. Numerical results show that the method works extremely well for very reasonable choices of spread sizes, regressors, and simulated paths and demonstrate that the proposed method compares well to existing alternatives.

The Next Step in the Evolution of Decision-Based Attribution: Micro or Rules-based Attribution (and the Atoms of Attribution)
Muralidhar, Arun,Muralidhar, Sanjay
SSRN
There has been a lot of focus on macro decision-based attribution (DPA), both in terms of decisions (e.g., asset allocation, manager selection, manager allocation and security selection) and who makes the decisions (decision-maker attribution). However, there has been little focus on the rules underlying the decisions â€" what we term micro DPA. For example, asset allocation value added may be generated by a hierarchy of rules that drive the decision at a very high level (e.g., a sub-model based on seasonality and a sub-model based on economic data) and then drilling further, by further rules that indicate the conditions under which the investor should go overweight or underweight. We argue that without a clear understanding of micro DPA, there is a danger that focusing solely on macro DPA may allow inefficient decisions to creep into a portfolio. We provide a simple case study of how rules-based micro DPA can be applied to extract a better understanding of decision-making in an investment organization and apply it to the asset allocation decision, but it is obvious that this same procedure can be applied at all levels of the portfolio and for all decisions. While this technique is clearly most easily applied to a quantitative process which has clearly specified rules, we also discuss how it can be applied to a qualitative investment process.

The Optimal Dynamic Reinsurance Strategies in Multidimensional Portfolio
Khaled Masoumifard,Mohammad Zokaei
arXiv

The present paper addresses the issue of choosing an optimal dynamic reinsurance policy, which is state-dependent, for an insurance company that operates under multiple insurance business lines. The optimal survival function is characterized as the unique nondecreasing viscosity solution of the associated Hamilton-Jacobi-Bellman equation (HJB) equation with limit one at infinity. The finite difference method (FDM) has been utilized for the numerical solution of the optimal survival function and optimal dynamic reinsurance strategies and the proof for the convergence of the numerical solution to the survival probability function is provided.



The Third Wave of Shareholder Influence and the Emergence of Informational Activism in Australia
Jefferies, Michael
SSRN
The role and functions of the shareholder have continually evolved to adapt to changing commercial realities. The first two ‘waves’ or categories of shareholder influence are outlined in both theory and Australian law according to a proposed ‘member-investor’ paradigm. Viewed through such a lens, this analysis exposes a steady downward trajectory of shareholder influence over time. A deconstruction of three prominent shareholder activism campaigns then reveals the emergence of a new form of ‘informational activism’ which is incompatible with prevailing contemporary views of the shareholder. Following its genesis in the United States and spreading as a global phenomenon, this new third ‘wave’ or category of shareholder influence represents an emerging view and function of shareholders as participatory investors with a substantial level of power in the market.