Do Shareholders Vote Strategically? Voting Behavior, Proposal Screening, and Majority Rules

Maug, Ernst G.; Rydqvist, Kristian

doi:10.2139/ssrn.471362

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Do Shareholders Vote Strategically? Voting Behavior, Proposal Screening, and Majority Rules

Mannheim Finance Working Paper No. 2006-15

ECGI - Finance Working Paper No. 31/2003

EFA 2004 Maastricht Meetings Paper No. 2516

59 Pages Posted: 8 Dec 2003 Last revised: 19 Sep 2008

See all articles by Ernst G. Maug

Ernst G. Maug

University of Mannheim Business School; European Corporate Governance Institute (ECGI)

Kristian Rydqvist

State University of New York at Binghamton - School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

There are 2 versions of this paper

Date Written: September 17, 2008

Abstract

We analyze how shareholders screen management proposals at annual general meetings. First, we use a simple model of strategic voting to develop a theoretical benchmark of effective information aggregation through voting. Then, we derive testable implications and provide structural estimates of the model parameters. The main conclusions are that shareholders vote strategically and that proposal screening increases value. Shareholders largely neutralize the lock-in effect of supermajority rules, thereby preventing the incorrect rejection of proposals.

Keywords: shareholder meeting, proposal screening, strategic voting, supermajority rule

JEL Classification: D72, G34

Suggested Citation: Suggested Citation

Maug, Ernst G. and Rydqvist, Kristian, Do Shareholders Vote Strategically? Voting Behavior, Proposal Screening, and Majority Rules (September 17, 2008). Mannheim Finance Working Paper No. 2006-15, ECGI - Finance Working Paper No. 31/2003 , EFA 2004 Maastricht Meetings Paper No. 2516, Available at SSRN: https://ssrn.com/abstract=471362 or http://dx.doi.org/10.2139/ssrn.471362