50 Pages Posted: 14 Mar 2012
Date Written: January 19, 2012
We use the Business Roundtable’s challenge to the SEC’s 2010 proxy access rule as a natural experiment to measure the value of shareholder proxy access. We find that firms that would have been most vulnerable to proxy access, as measured by institutional ownership and activist institutional ownership in particular, lost value on October 4, 2010, when the SEC unexpectedly announced that it would delay implementation of the Rule in response to the Business Roundtable challenge. We also examine intra-day returns and find that the value loss occurred just after the SEC’s announcement on October 4. We find similar results on July 22, 2011, when the D.C. Circuit ruled in favor of the Business Roundtable. These findings are consistent with the view that financial markets placed a positive value on shareholder access, as implemented in the SEC’s 2010 Rule.
Keywords: Shareholder proxy access, Corporate governance
JEL Classification: G14, G32, G34, G38
Suggested Citation: Suggested Citation
Becker, Bo and Bergstresser, Daniel and Subramanian, Guhan, Does Shareholder Proxy Access Improve Firm Value? Evidence from the Business Roundtable Challenge (January 19, 2012). Harvard Business School Finance Working Paper No. 11-052; Harvard Business School NOM Unit Working Paper No. 11-052; Harvard Law and Economics Discussion Paper No. 685. Available at SSRN: https://ssrn.com/abstract=1695666 or http://dx.doi.org/10.2139/ssrn.1695666