Abstract

http://ssrn.com/abstract=1984606
 


 



Managerial Accommodation, Proxy Access, and the Cost of Shareholder Empowerment


John G. Matsusaka


University of Southern California - Marshall School of Business; USC Gould School of Law

Oguzhan Ozbas


University of Southern California - Marshall School of Business - Finance and Business Economics Department

February 2014

USC CLEO Research Paper Series No. C12-1
USC Legal Studies Research Paper Series No. 12-3
Marshall School of Business Working Paper No. FBE 02-12
AFA 2013 San Diego Meetings Paper

Abstract:     
This paper develops a theory of corporate decision making to study the benefits and costs of shareholder empowerment. We show how permitting shareholders to propose directors or policies can cause value-maximizing managers to take value-reducing actions to accommodate activist investors with non-value-maximizing goals. The model identifies an important distinction between the right to approve and the right to propose. The right to approve is weak; the right to propose is impactful but can help as well as hurt shareholders. We identify implications for current policy discussions concerning director elections, proxy access, bylaw amendments, and shareholder voting in general.

Number of Pages in PDF File: 47

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Date posted: January 14, 2012 ; Last revised: February 12, 2014

Suggested Citation

Matsusaka, John G. and Ozbas, Oguzhan, Managerial Accommodation, Proxy Access, and the Cost of Shareholder Empowerment (February 2014). USC Legal Studies Research Paper Series No. 12-3; Marshall School of Business Working Paper No. FBE 02-12 ; AFA 2013 San Diego Meetings Paper. Available at SSRN: http://ssrn.com/abstract=1984606 or http://dx.doi.org/10.2139/ssrn.1984606

Contact Information

John G. Matsusaka
University of Southern California - Marshall School of Business ( email )
Department of Finance & Business Economics
Los Angeles, CA 90089
United States
213-740-6495 (Phone)
213-740-6650 (Fax)

USC Gould School of Law
699 Exposition Boulevard
Los Angeles, CA 90089
United States
213-740-6495 (Phone)

Oguzhan Ozbas (Contact Author)
University of Southern California - Marshall School of Business - Finance and Business Economics Department ( email )
Marshall School of Business
Los Angeles, CA 90089
United States
213-740-0781 (Phone)
213-740-6650 (Fax)
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