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

72 Pages Posted: 15 Dec 2011  

Bonnie Buchanan

Seattle University - Albers School of Business and Economics

Jeffry M. Netter

University of Georgia - Department of Banking and Finance; University of Georgia Law School

Annette B. Poulsen

University of Georgia - Department of Banking and Finance

Tina Yang

Villanova University - School of Business

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)

Seattle University - Albers School of Business and Economics ( email )

900 Broadway
Seattle, WA 98122
United States
206 296-5977 (Phone)

Jeffry M. Netter

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

Terry College of Business
Athens, GA 30602-6253
United States
706-542-3654 (Phone)

HOME PAGE: http://www.terry.uga.edu/finance/facultyprofiles/n

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
Athens, GA 30602-6253
United States
706-542-4450 (Phone)

Tina Yang

Villanova University - School of Business ( email )

800 Lancaster Avenue
Villanova, PA 19085-1678
United States
610-519-5460 (Phone)

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