Board of Directors' Responsiveness to Shareholders: Evidence from Shareholder Proposals
University of Colorado at Boulder - Department of Accounting
Columbia Business School - Accounting, Business Law & Taxation
University of Utah
August 30, 2010
Journal of Corporate Finance, Vol. 16, pp. 53-72, 2010
In recent years boards have become significantly more likely to implement nonbinding, majority-vote (MV) shareholder proposals. Using a sample of 620 MV proposals between 1997 and 2004, we find that shareholder pressure (e.g., the voting outcome and the influence of the proponent) and the type of proposals are the main determinants of the implementation decision, while traditional governance indicators do not seem to affect the decision. We then examine the labor market consequences of the implementation decision for outside directors and find that directors implementing MV shareholder proposals experience a one-fifth reduction in the likelihood of losing their board seat as well as other directorships.
Number of Pages in PDF File: 50
Keywords: shareholder proposals, shareholder activism, director labor market
JEL Classification: G34
Date posted: March 20, 2008 ; Last revised: September 23, 2012
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