Investor Perceptions of Board Performance: Evidence from Uncontested Director Elections
42 Pages
Posted: 18 Sep 2009
University of Pennsylvania - Accounting Department
Carson College of Business
Indiana University - Kelley School of Business - Department of Accounting
Penn State University
There are 2 versions of this paper
Date Written: September 15, 2009
Abstract
This paper provides evidence that uncontested director elections provide informative polls of investor perceptions regarding board performance. We find that higher (lower) vote approval is associated with lower (higher) stock price reactions to subsequent announcements of management turnovers. In addition, firms with low vote approval are more likely to experience CEO turnover, greater board turnover, lower CEO compensation, fewer and better received acquisitions, and more and better received divestitures in the future. These findings hold after controlling for other variables reflecting or determining investor perceptions, suggesting that elections not only inform as a summary statistic, but incrementally inform as well.
Keywords: Corporate Governance, Director Voting, Performance Measurement
JEL Classification: G34, M40
Suggested Citation:
Suggested Citation
Fischer, Paul E. and Gramlich, Jeffrey and Miller, Brian P. and White, Hal D., Investor Perceptions of Board Performance: Evidence from Uncontested Director Elections (September 15, 2009). Journal of Accounting & Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1474390
