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Do Boards Pay Attention When Institutional Investor Activists 'Just Vote No'?
Diane Del Guercio University of Oregon - Department of Finance Laura J. Seery University of Tennessee, Knoxville Tracie Woidtke University of Tennessee, Knoxville - College of Business Administration January 2008 Abstract: We examine 'just vote no' campaigns, a recent innovation in low-cost shareholder activist tools whereby activists encourage their fellow shareholders to withhold votes toward a director's election to express dissatisfaction with management performance or the firm's corporate governance structure. Grundfest (1993) argues that a substantial withheld vote will motivate directors to take immediate action to avoid further embarrassment. We find a variety of supportive evidence, including operating performance improvements and abnormal disciplinary CEO turnover, indicating that campaigns induce boards to take actions in shareholders' interests. Furthermore, abnormal turnover is robust to controlling for concurrent events and firm- and CEO-specific controls.
Keywords: CEO turnover, shareholder activism, director elections, public pension funds JEL Classifications: G23, G34, G30 Working Paper SeriesDate posted: August 12, 2004 ; Last revised: March 11, 2008Suggested CitationContact Information
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