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Corporate Voting vs. Market Price Setting

Yair Listokin

Yale Law School

July 3, 2008

Yale Law & Economics Research Paper No. 362

This paper examines the relation between two means of information aggregation for corporations - corporate voting and stock market pricing. If the median voter and the price-setting shareholder share similar information sets, then the outcome of close proxy contests should not have a systematic effect on stock prices. The paper shows, however, that close dissident victories are associated with significant positive movements in stock prices, while close management victories are associated with negative stock price effects. The median voter values management control more highly than the price-setting shareholder. This suggests that voting and market pricing aggregate information in very different ways, with important implications for the role of voting and market pricing in corporate law and finance.

Number of Pages in PDF File: 36

Keywords: corporate governance, shareholder voting, democracy, event study, regression discontinuity

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Date posted: March 25, 2008 ; Last revised: January 16, 2009

Suggested Citation

Listokin, Yair, Corporate Voting vs. Market Price Setting (July 3, 2008). Yale Law & Economics Research Paper No. 362. Available at SSRN: https://ssrn.com/abstract=1112671 or http://dx.doi.org/10.2139/ssrn.1112671

Contact Information

Yair Listokin (Contact Author)
Yale Law School ( email )
P.O. Box 208215
New Haven, CT 06520-8215
United States
203-436-2567 (Phone)

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