On Enhancing Shareholder Control : A (Dodd-) Frank Assessment of Proxy Access

We use events related to a proxy access rule passed by the SEC in 2010 (but never implemented) as natural experiments to study the valuation effects of exogenous changes in the degree of shareholder control. We find that increases (decreases) in perceived control have positive (negative) effects, and that the effects are strongest for poorly-performing firms, for firms with shareholders likely to exercise control, and for firms where acquiring a stake is relatively cheap. We also find evidence that the benefits of increased shareholder control are muted for firms with shareholders who might have interests other than shareholder value maximization. Our results overall suggest that an increase in shareholder control from its current level would generally benefit shareholders