It was not shareholder passivity that caused the financial crisis, it was shareholder activism

I cannot believe that a decade after the financial crisis people are still spreading these stories:

In policy circles, the currently prevailing narrative views shareholder engagement as a desirable corporate governance attribute, which is able not only to improve corporate governance and performance, but also to ensure long-term stability and social responsibility. This narrative—also associated with lingering post-global-financial-crisis views that attribute managerial excessive risk-taking and corporate failures to the lack of shareholder engagement and excessive short-termism—found expression in the enactment of the 2010 UK Stewardship Code (revised in 2012 and currently under revision), which aims at making institutional investors serve the whole economy under a long-termism wrapper.

In my book, Corporate Governance after the Financial Crisis, I explain that it was much more likely that shareholder activism that contributed to the financial crisis:

As we have seen, regulators and some commentators identified executive compensation schemes that focused bank managers on short-term returns to shareholders as a causal factor in the financial crisis of 2007-2008. As we have also seen, shareholder activists long have complained that these schemes provide pay without performance. This was one of the corporate governance flaws Dodd-Frank was intended to address, most notably via say on pay.

The trouble, of course, is that shareholders and society do not have the same goals when it comes to executive pay. Society wants managers to be more risk averse. Shareholders want them to be less risk averse. If say on pay and other shareholder empowerment provisions of Dodd-Frank succeed, manager and shareholder interests will be further aligned, which will encourage the former to undertake higher risks in the search for higher returns to shareholders. Accordingly, as Christopher Bruner aptly observed, “the shareholder-empowerment position appears self-contradictory, essentially amounting to the claim that we must give shareholders more power because managers left to the themselves have excessively focused on the shareholders’ interests.”