76 Pages Posted: 19 Mar 2008 Last revised: 10 Nov 2008
Date Written: November 6, 2008
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: Suggested Citation