So do we have any decent empirical evidence on this point? I have something like this discussion/argument with my Corporations class every semester. My uninformed sense is that smaller investors are few and far between in public companies (the rise of day trading notwithstanding), but I'd love to know what the available evidence suggests.

Very interesting.... But I wonder if that could also cut the other way. Many may presume that mom and pop investors are rationally apathetic and passive investors, which could lend more support to a strong board-centric model. If, however, stockholders are large, sophisticated investors, then maybe there's a stronger normative claim in support of shareholder democracy. These investors arguably are more capable of taking control of their investments and making informed (or "activist") decisions at the ballot box through elections and other stockholder proposals. I don't necessarily agree with that conclusion, it's just a thought.

On empirical evidence, interestingly, there were some materials distributed at the conference prepared by Daniel Burch, CEO of Mackenzie Partners, that included a "Sample Shareholder Profile" chart with the following statistics:
Activist--7%
Retail--10%
Plan--6%
Insiders--8%
Other Institutions--20%
Arb/Hedge--17%
Top 10 Institutions--32%

I am not sure the type of company or companies being profiled. However, these figures do not really resolve the issue. They certainly demonstrate that institutions make up the bulk of the shareholder pool. Yet, if retail or mom and pop investors really do account for 10% of the shareholder pool, then these figures suggest that such shareholders continue to have an important presence in the market.

Brian Cartwright, the SEC's General Counsel, gave a speech on this topic last October. He calls it the "deretailization" of the U.S. market:

In the United States, retail investors own a much smaller percentage of publicly traded stock than they used to. Estimates vary, but widely cited sources put retail stock ownership in 1950 at more than 90%, while I've seen some estimates that put current retail ownership as low as a little over 30%. Other estimates aren't quite as low.

I think the interesting implication of all this is what it means for market regulation. The SEC's assumption has always been to focus on issuer disclosure as the bedrock of investor protection. However, if only 30% of all issuer stock is held by retail investors, it seems likely that most U.S. retail investors access the markets through mutual funds and other institutions. If that's the case, the primary investor protection issue moves from issuer disclosure and issuer corporate gov, to intermediary disclosure and governance. Issuer proxy access actually may become more important, since it suddenly becomes relevant (it's not, really, in a world of unorganized retail investors) -- and institutions may have the expertise and, if done properly, the incentives to overcome the management monitoring problem at the heart of the ownership-control divide. At the same time, institutional conflicts of interest and disclosure become the new hot-button issues, and protection of minority shareholders becomes more prominent.