Shareholders in the Boardroom: Wealth Effects of the SEC’s Rule to Facilitate Director Nominations
Ali C. Akyol
University of Melbourne - Department of Finance; Financial Research Network (FIRN)
Wei Fen Lim
University of Melbourne
Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)
June 7, 2010
Journal of Financial and Quantitative Analysis (JFQA), Forthcoming
23rd Australasian Finance and Banking Conference 2010 Paper
Current attempts to reform financial markets presume that shareholder empowerment benefits shareholders. We investigate the wealth effects associated with the SEC’s rule to facilitate director nominations by shareholders. Our results are not in line with shareholder empowerment creating value: the average daily abnormal returns surrounding events that increase (decrease) the probability of passage of the proposal are significantly negative (positive). Furthermore, given an increase in the probability of passage of the proposal, firms whose shareholders are more likely to use the rule to nominate directors experience more negative abnormal returns.
Number of Pages in PDF File: 50
Keywords: Director nominations, shareholder empowerment, proxy access, board effectiveness
JEL Classification: G34, G38
Date posted: December 22, 2009 ; Last revised: June 30, 2011
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