The role of shareholder proposals in corporate governance
This paper examines the corporate governance role of shareholder-initiated proxy proposals. We find that target firms tend to underperform and have generally poor governance structures, with little indication of systematic agenda-seeking by the proposal sponsors. Governance quality also affects the voting outcomes and the announcement period stock price effects, with the latter strongest for first-time submissions and during stock market peaks. Proposal implementation is largely a function of voting success but is affected by managerial entrenchment and rent-seeking. The results imply that shareholder proposals are a useful device of external control, countering arguments that they should be restricted rather than facilitated under the SEC's current regulatory agenda.
Year of publication: |
2011
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Authors: | Renneboog, Luc ; Szilagyi, Peter G. |
Published in: |
Journal of Corporate Finance. - Elsevier, ISSN 0929-1199. - Vol. 17.2011, 1, p. 167-188
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Publisher: |
Elsevier |
Keywords: | Shareholder activism Shareholder proposals Corporate governance Sample selection |
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