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Investor Perceptions of Board Performance: Evidence from Uncontested Director ElectionsPaul E. FischerUniversity of Pennsylvania - The Wharton School Jeffrey D. GramlichUniversity of Southern Maine - School of Business Brian P. MillerIndiana University - Kelley School of Business Hal D. WhiteUniversity of Michigan - Ross School of Business September 15, 2009 Journal of Accounting & Economics, Forthcoming Abstract: This paper provides evidence that uncontested director elections provide informative polls of investor perceptions regarding board performance. We find that higher (lower) vote approval is associated with lower (higher) stock price reactions to subsequent announcements of management turnovers. In addition, firms with low vote approval are more likely to experience CEO turnover, greater board turnover, lower CEO compensation, fewer and better received acquisitions, and more and better received divestitures in the future. These findings hold after controlling for other variables reflecting or determining investor perceptions, suggesting that elections not only inform as a summary statistic, but incrementally inform as well.
Number of Pages in PDF File: 42 Keywords: Corporate Governance, Director Voting, Performance Measurement JEL Classification: G34, M40 Accepted Paper SeriesDate posted: September 18, 2009Suggested CitationContact Information
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