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Shareholder Proposal Rules and Practice: Evidence from a Comparison of the US and UK


Bonnie Buchanan


Seattle University - Albers School of Business and Economics

Jeffry M. Netter


University of Georgia - Department of Banking and Finance; University of Georgia Law School

Annette B. Poulsen


University of Georgia - Department of Banking and Finance

Tina Yang


Villanova University - School of Business

November 1, 2011


Abstract:     
We provide an in-depth comparison of US and UK shareholder proposal rules and relate the differences in rules to differences in proposing activities and performance, using comprehensive shareholder proposal data from both countries for 2000 through 2006. UK proposal rules are more onerous on proposal sponsors but UK proposals seem to be a more powerful governance device than US counterparts since they are binding and UK shareholders have the statutory right to call special meetings and elect directors. We observe most UK proposals are presented at special meetings and target board election. Institutions are the most active sponsor of UK proposals. As US proxy rules emphasize shareholder participation and protection rather than empowerment, there are a significantly greater number of shareholder proposals initiated in the US during the sample period, and small shareholders and social proposals dominate the proposing scene of the US. Our results suggest that shareholders can impact the corporate governance and firm performance but that the methods through which shareholders are empowered are important. We also argue that our results suggest that it may be appropriate to consider whether activist shareholders have additional responsibilities to the firm and other shareholders, including a duty to disclose their agendas or a fiduciary duty to other shareholders.

Number of Pages in PDF File: 72

Keywords: Corporate Governance, Shareholder Proposals, Shareholder Activism, Proxy Voting, Proxy Access, Proxy Reform

JEL Classification: F30, G30, G38

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Date posted: December 15, 2011  

Suggested Citation

Buchanan, Bonnie and Netter, Jeffry M. and Poulsen, Annette B. and Yang, Tina, Shareholder Proposal Rules and Practice: Evidence from a Comparison of the US and UK (November 1, 2011). Available at SSRN: http://ssrn.com/abstract=1969606 or http://dx.doi.org/10.2139/ssrn.1969606

Contact Information

Bonnie Buchanan (Contact Author)
Seattle University - Albers School of Business and Economics ( email )
900 Broadway
Seattle, WA 98122
United States
206 296-5977 (Phone)
Jeffry M. Netter
University of Georgia - Department of Banking and Finance ( email )
Terry College of Business
Athens, GA 30602-6253
United States
706-542-3654 (Phone)
HOME PAGE: http://www.terry.uga.edu/finance/facultyprofiles/n
University of Georgia Law School
Athens, GA 30602
United States
Annette B. Poulsen
University of Georgia - Department of Banking and Finance ( email )
Terry College of Business
Athens, GA 30602-6253
United States
706-542-3645 (Phone)
Tina Yang
Villanova University - School of Business ( email )
800 Lancaster Avenue
Villanova, PA 19085-1678
United States
610-519-5460 (Phone)
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