Empowering small shareholders: a comparison of three instruments

In this paper, three instruments for empowering small, individual shareholders are compared: proxy investing, proxy voting institutions and infomediaries. The working of each instrument is discussed with special emphasis on the problems of information gathering and coalition forming. Subsequently, each instrument is analysed with respect to appropriateness, costs and effectiveness. No instrument turns out to be clearly superior to the others. Although proxy investing is the most popular concept among small (individual) shareholders at present, the long-run potential of proxy voting institutions and infomediaries may be higher. Since more research could be helpful to establish which of these two options is best, both non-profit organisations and governments could in the meantime stimulate experiments with proxy voting institutions and infomediaries for small shareholders.