Do Shareholders Vote Strategically? Voting Behavior, Proposal Screening, and Majority Rules
Posted: 17 Jan 2009
There are 2 versions of this paper
Do Shareholders Vote Strategically? Voting Behavior, Proposal Screening, and Majority Rules
Date Written: January 2009
Abstract
We analyze how shareholders screen management proposals at annual general meetings. First, we use a simple model of strategic voting to develop a theoretical benchmark of effective information aggregation through voting. Then, we derive testable implications and provide structural estimates of the model parameters. The main conclusions are that shareholders vote strategically and that proposal screening increases value. Shareholders largely neutralize the lock-in effect of supermajority rules, thereby preventing the incorrect rejection of proposals.
Keywords: D72, G34
Suggested Citation: Suggested Citation