Shareholder Proposal Rules and Practice: Evidence from a Comparison of the US and UK

72 Pages Posted: 15 Dec 2011

See all articles by Bonnie Buchanan

Bonnie Buchanan

Surrey Business School, University of Surrey

Jeffry M. Netter

Department of Finance; University of Georgia Law School

Annette B. Poulsen

University of Georgia - Department of Banking and Finance; European Corporate Governance Institute (ECGI)

Tina Yang

University of South Florida

Multiple version iconThere are 2 versions of this paper

Date Written: November 1, 2011

Abstract

We provide an in-depth comparison of US and UK shareholder proposal rules and relate the differences in rules to differences in proposing activities and performance, using comprehensive shareholder proposal data from both countries for 2000 through 2006. UK proposal rules are more onerous on proposal sponsors but UK proposals seem to be a more powerful governance device than US counterparts since they are binding and UK shareholders have the statutory right to call special meetings and elect directors. We observe most UK proposals are presented at special meetings and target board election. Institutions are the most active sponsor of UK proposals. As US proxy rules emphasize shareholder participation and protection rather than empowerment, there are a significantly greater number of shareholder proposals initiated in the US during the sample period, and small shareholders and social proposals dominate the proposing scene of the US. Our results suggest that shareholders can impact the corporate governance and firm performance but that the methods through which shareholders are empowered are important. We also argue that our results suggest that it may be appropriate to consider whether activist shareholders have additional responsibilities to the firm and other shareholders, including a duty to disclose their agendas or a fiduciary duty to other shareholders.

Keywords: Corporate Governance, Shareholder Proposals, Shareholder Activism, Proxy Voting, Proxy Access, Proxy Reform

JEL Classification: F30, G30, G38

Suggested Citation

Buchanan, Bonnie and Netter, Jeffry M. and Poulsen, Annette B. and Yang, Tina, Shareholder Proposal Rules and Practice: Evidence from a Comparison of the US and UK (November 1, 2011). Available at SSRN: https://ssrn.com/abstract=1969606 or http://dx.doi.org/10.2139/ssrn.1969606

Bonnie Buchanan (Contact Author)

Surrey Business School, University of Surrey ( email )

Guildford
Guildford, Surrey GU2 5XH
United Kingdom

Jeffry M. Netter

Department of Finance ( email )

Terry College of Business
Athens, GA 30602-6253
United States
706-542-4450 (Phone)

HOME PAGE: http://www.terry.uga.edu/directory/profile/jnetter/

University of Georgia Law School

225 Herty Drive
Athens, GA 30602
United States

Annette B. Poulsen

University of Georgia - Department of Banking and Finance ( email )

Terry College of Business
Department of Finance
Athens, GA 30602-6253
United States
706-542-4450 (Phone)

HOME PAGE: http://www.terry.uga.edu/directory/profile/apoulsen/

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Tina Yang

University of South Florida ( email )

140 7th Ave S
St. Petersburg, FL 33701
United States
7278734568 (Phone)

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