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In a world of active, empowered shareholders, the match between shareholders and public corporations can potentially affect firm value. This article examines the extent to which publicly held corporations can shape their shareholder base. Two sorts of approaches are available: direct/recruitment strategies; and shaping or socialization strategies. Direct/recruitment strategies through which “good” shareholders are attracted to the firm include: going public; targeted placement of shares; traditional investor relations; the exploitation of clientele effects; and de-recruitment. “Shaping” or “socialization” strategies in which shareholders of a “bad” or unknown type are transformed into shareholders of the “good” type include: choice of domicile; choice of stock exchange; the new “strategic” investor relations; and capital structure. For each type of strategy, I consider the extent to which corporate and securities law facilitates or interferes with the strategy, as well as the ways in which it controls abuse. In paying close attention to the relationship between shareholder base and firms, this article attempts to merge investor relations, very broadly construed, with corporate governance.


Corporations, securities, shareholder relations, corporate governance, crafting the shareholder base in public corporations, good shareholders v. bad shareholders, recruitment, preference for certain shareholders, benefits and dangers of picking shareholders, shaping the shareholder base as part of corporate governance, management control over ownership, investor relations

Publication Title

Cornell Law Review

Publication Citation

97 Cornell L. Rev. 849 (2012).