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Board of Directors' Responsiveness to Shareholders: Evidence from Shareholder Proposals


Yonca Ertimur


University of Colorado at Boulder - Department of Accounting

Fabrizio Ferri


Columbia Business School - Accounting, Business Law & Taxation

Stephen Stubben


University of Utah

August 30, 2010

Journal of Corporate Finance, Vol. 16, pp. 53-72, 2010

Abstract:     
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

working papers series





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Date posted: March 20, 2008 ; Last revised: September 23, 2012

Suggested Citation

Ertimur, Yonca and Ferri, Fabrizio and Stubben, Stephen, Board of Directors' Responsiveness to Shareholders: Evidence from Shareholder Proposals (August 30, 2010). Journal of Corporate Finance, Vol. 16, pp. 53-72, 2010. Available at SSRN: http://ssrn.com/abstract=1106375 or http://dx.doi.org/10.2139/ssrn.1106375

Contact Information

Yonca Ertimur (Contact Author)
University of Colorado at Boulder - Department of Accounting ( email )
419 UCB
Boulder, CO 80309-0419
United States
Fabrizio Ferri
Columbia Business School - Accounting, Business Law & Taxation ( email )
3022 Broadway
New York, NY 10027
United States

Stephen Stubben
University of Utah ( email )
1655 E. Campus Center
Salt Lake City, UT 84112
United States
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