Is Shareholders' Voice Strategically Shaped at Shareholder Meetings, and Does the Market Care?

Abstract

I analyze shareholder meeting transcripts and data including on undisclosed shareholder-submitted questions. I demonstrate that companies facing shareholder dissatisfaction (i.e., shareholders voting against management) are more likely to implement methods that limit shareholder voice during these meetings. Such methods include ignoring submitted questions and explicitly restricting the range of topics addressed. When such methods are used, meetings tend to be shorter and allocate less time to addressing shareholder questions. These voice-limiting methods are significantly more prevalent in virtual-only meetings, suggesting that particularly in these meetings shareholders' voice is limited. Virtual-only meetings are followed by smaller absolute abnormal returns, lower trading volume and volatility, and fewer online discussions. In contrast, meetings with more extensive communication are followed by stronger price updating. Taken together, these results indicate that, despite the increased accessibility of virtual-only meetings, relative to in-person meetings they generate less meaningful information for the market and, as a result, stimulate less trading activity.

Note: Presentation of previous version of the paper is available at this link: https://www.youtube.com/watch?v=vjp6VcISqDE&feature=youtu.be

Keywords: Shareholder meetings, shareholder votes, shareholder voice, virtual, in-person, Covid-19. JEL codes: G30, G34, G39, M20, O14, O33

JEL Classification: G30, G34, G39, M20, O14, O33