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Shareholders in the Boardroom: Wealth Effects of the SEC’s Rule to Facilitate Director NominationsAli C. AkyolUniversity of Melbourne - Department of Finance; Financial Research Network (FIRN) Wei Fen LimUniversity of Melbourne Patrick VerwijmerenErasmus 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 Abstract: 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 working papers seriesDate posted: December 22, 2009 ; Last revised: June 30, 2011Suggested CitationContact Information
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