Investor Perceptions of Board Performance: Evidence from Uncontested Director Elections

Fischer, Paul E.; Gramlich, Jeffrey; Miller, Brian P.; White, Hal D.

Investor Perceptions of Board Performance: Evidence from Uncontested Director Elections

Journal of Accounting & Economics, Forthcoming

42 Pages Posted: 18 Sep 2009

See all articles by Paul E. Fischer

Paul E. Fischer

University of Pennsylvania - Accounting Department

Brian P. Miller

Indiana University - Kelley School of Business - Department of Accounting

Hal D. White

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