Management (of) Proposals

Abstract

Using shareholder voting records on management proposals, we find evidence of systematic managerial influence on outcomes of close votes. This behavior is more pronounced for firms with low institutional ownership, for binding proposals, and for proposals receiving a negative ISS recommendation. Our estimates suggest that over 60% of management proposals headed for a narrow defeat have their outcome altered. We also identify new mechanisms by which managers influence the voting outcomes, such as meeting adjournment and selective campaigning. Finally, the market reacts positively to the failure of management proposals. Combined with the theoretical model, these results suggest that managerial influence on the voting process is value-destroying.

Keywords: Corporate Voting, Management Proposals, Shareholder Proposals, Manipulation

JEL Classification: G30, G34, G38