Electing Directors

76 Pages Posted: 19 Mar 2008 Last revised: 10 Nov 2008

See all articles by Jie Cai

Jie Cai

Drexel University

Jacqueline L. Garner

Georgia Institute of Technology - Scheller College of Business

Ralph A. Walkling

Drexel University - Lebow College of Business

Date Written: November 6, 2008

Abstract

Using a large sample of director elections, we document that shareholder votes are significantly related to firm performance, governance, director performance, and voting mechanisms. However, most variables, except meeting attendance and ISS recommendation, have little economic impact on shareholder votes. Even poorly performing directors and firms typically receive over 90% of votes cast. Nevertheless, fewer votes lead to lower 'abnormal' CEO compensation and a higher probability of removing poison pills, classified boards, and CEOs. Meanwhile, director votes have little impact on election outcomes, firm performance, or director reputation. These results provide important benchmarks for the current debate about election reforms.

Keywords: Board of directors, election of directors

JEL Classification: G34

Suggested Citation

Cai, Jie and Garner, Jacqueline L. and Walkling, Ralph August, Electing Directors (November 6, 2008). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1101924

Jie Cai (Contact Author)

Drexel University ( email )

LeBow College of Business
Philadelphia, PA 19104
United States
215-895-1755 (Phone)
215-895-2955 (Fax)

HOME PAGE: http://faculty.lebow.drexel.edu/CaiJ/

Jacqueline L. Garner

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Ralph August Walkling

Drexel University - Lebow College of Business ( email )

LeBow College of Business
Philadelphia, PA 19104
United States
(215) 895-4920 (Phone)
(215) 895-6119 (Fax)

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