Investor Perceptions of Board Performance: Evidence from Uncontested Director Elections

42 Pages Posted: 18 Sep 2009  

Paul E. Fischer

University of Pennsylvania - Accounting Department

Jeffrey Gramlich

Carson College of Business

Brian P. Miller

Indiana University - Kelley School of Business - Department of Accounting

Hal D. White

Penn State University

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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

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

Paul E. Fischer

University of Pennsylvania - Accounting Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Jeffrey Gramlich

Carson College of Business ( email )

Wilson Rd.
College of Business
Pullman, WA 99164
United States

HOME PAGE: http://https://business.wsu.edu/research-faculty/institutes/hoops-institute/

Brian P. Miller (Contact Author)

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States
812-855-2606 (Phone)

Hal D. White

Penn State University ( email )

210 Business Building
Smeal College of Business
University Park, PA 16802-3306
United States
814-863-7055 (Phone)

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