The Role of Advisory Services in Proxy Voting

54 Pages Posted: 21 Jul 2009 Last revised: 18 Nov 2022

See all articles by Cindy R. Alexander

Cindy R. Alexander

Securities and Exchange Commission (SEC)

Mark A. Chen

Georgia State University - Robinson College of Business

Duane J. Seppi

Carnegie Mellon University - David A. Tepper School of Business

Chester S. Spatt

Carnegie Mellon University - David A. Tepper School of Business

Date Written: July 2009

Abstract

This paper studies the information content and consequences of third-party voting advice issued during proxy contests. We document significant abnormal stock returns around proxy vote recommendations and develop an estimation procedure for disentangling stock price effects due to changes in outcome probabilities from those due to changes in outcome-contingent valuations. We find that voting advice is a good predictor of contest outcomes and that vote recommendations appear to certify the extent to which dissidents can add value. Thus, proxy advice seems to play a dual informational role in financial markets.

Suggested Citation

Alexander, Cindy R. and Chen, Mark A. and Seppi, Duane J. and Spatt, Chester S., The Role of Advisory Services in Proxy Voting (July 2009). NBER Working Paper No. w15143, Available at SSRN: https://ssrn.com/abstract=1434658

Cindy R. Alexander (Contact Author)

Securities and Exchange Commission (SEC) ( email )

Washington
United States

Mark A. Chen

Georgia State University - Robinson College of Business ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Duane J. Seppi

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States
412-268-2298 (Phone)
412-268-8896 (Fax)

Chester S. Spatt

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States
412-268-8834 (Phone)
412-268-6689 (Fax)

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