Electing Directors

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

Jie Cai

Drexel University

Jacqueline L. Garner

Mississippi State University - Department of Finance and Economics

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 A., 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

Mississippi State University - Department of Finance and Economics ( email )

College of Business
McCool Hall, Room 316A PO Box 9580
Mississippi State, MS 39762
United States
662.325.6716 (Phone)
662.325.1977 (Fax)

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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