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On Enhancing Shareholder Control: A (Dodd-) Frank Assessment of Proxy Access

57 Pages Posted: 18 Jan 2011 Last revised: 22 Oct 2013

Jonathan B. Cohn

University of Texas at Austin

Stuart Gillan

University of Georgia - Department of Finance

Jay C. Hartzell

University of Texas at Austin - Department of Finance

Date Written: October 22, 2013

Abstract

We use events related to a proxy access rule passed by the SEC in 2010 (but never implemented) as natural experiments to study the valuation effects of exogenous changes in the degree of shareholder control. We find that increases (decreases) in perceived control have positive (negative) effects, and that the effects are strongest for poorly-performing firms, for firms with shareholders likely to exercise control, and for firms where acquiring a stake is relatively cheap. We also find evidence that the benefits of increased shareholder control are muted for firms with shareholders who might have interests other than shareholder value maximization. Our results overall suggest that an increase in shareholder control from its current level would generally benefit shareholders.

Keywords: Corporate Governance, Activist Shareholders, Proxy Access

JEL Classification: G0,G2

Suggested Citation

Cohn, Jonathan B. and Gillan, Stuart and Hartzell, Jay C., On Enhancing Shareholder Control: A (Dodd-) Frank Assessment of Proxy Access (October 22, 2013). Available at SSRN: https://ssrn.com/abstract=1742506 or http://dx.doi.org/10.2139/ssrn.1742506

Jonathan B. Cohn (Contact Author)

University of Texas at Austin ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-232-6827 (Phone)

Stuart L. Gillan

University of Georgia - Department of Finance ( email )

Terry College of Business
Athens, GA 30602-6253
United States

Jay C. Hartzell

University of Texas at Austin - Department of Finance ( email )

1 University Station B6600
Austin, TX 78712
United States
512-471-6779 (Phone)
512-471-5073 (Fax)

HOME PAGE: http://www.mccombs.utexas.edu/faculty/jay.hartzell/

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