Who Are the Active Investors? Evidence from Shareholder Activism and Business Angels

Abstract

[eng] Research on shareholder activism has evolved substantially over the past four decades, but two key research gaps remain. First, prior literature reviews on shareholder activism have often faced challenges in managing the vast number of publications from a disciplinary-neutral perspective. Second, empirical studies have mainly focused on activism in large public corporations, leaving research on shareholder activism in privately held firms underexplored. This thesis addresses these gaps by employing bibliometric methods to systematically review the literature of shareholder activism and by empirically investigating the determinants and outcomes of business angels' active involvement in privately held entrepreneurial firms.

This thesis is structured into three main chapters. Chapter 2 provides a literature review on shareholder activism through a bibliometric analysis. Chapter 3 empirically explores the determinants of business angel activism from a proximity perspective. Chapter 4 empirically examines the impact of business angel activism on venture performance and investment returns. Additionally, an appendix is included, offering a comprehensive literature review of the broader field of corporate governance.

The results show that shareholder activism is undergoing significant growth, with an increasing trend toward interdisciplinarity. However, intradisciplinary citation patterns and fragmented disciplinary approaches remain evident. Using data collected through an online survey targeted ay Spanish business angels, the two empirical studies highlight the role of cognitive, social, and organizational proximity in shaping the likelihood of business angel activism, as well as the subsequent impact of this activism on performance outcomes. Specifically, cognitive proximity between angel investors and entrepreneurs increases the likelihood of business angel activism, while social proximity between angel investors and entrepreneurs decreases the probability of business angel activism. Furthermore, organizational proximity among angel investors within syndicates negatively affects their level of activism. Ultimately, the active involvement of business angels leads to improved venture performance and higher investment returns, reinforcing the idea that business angels are value-adding investors.

This thesis offers several academic and practical contributions. Academically, it provides the first bibliometric review of shareholder activism to analyze interdisciplinary collaboration and identify the foundational themes, key topics and emerging trends in the field. Second, it empirically investigates the underexplored phenomenon of business angel activism in privately held firms, proposing a theoretical framework that emphasizes the collaborative relationship between angel investors and entrepreneurs. By integrating business angel investing with proximity concepts, this thesis contributes to both the entrepreneurship and economic geography literature, offering a more nuanced understanding of the factors influencing investor behavior. Furthermore, it adds insight to the emerging literature on collective action in business angel groups, suggesting that individual angel investors may no longer need to be heavily involved in post-investment activities when their affiliated networks and syndicates can take on this role with enhanced collective capabilities.

For practitioners and policymakers, this thesis highlights three key implications. First, policymakers should adopt a holistic approach to shareholder activism, considering both financial and non-financial impacts at various levels. Second, entrepreneurs should recognize the critical role of angel investors’ industry experience and social ties in shaping hands-on involvement, which is crucial for early-stage ventures. Third, angel investors are encouraged to maintain close relationships with entrepreneurs and actively engage in post-investment activities—such as monitoring, advising, and leveraging networks—to enhance both venture performance and investment returns.