The Elimination of Broker Voting in Director Elections
15 Pages Posted: 17 Dec 2011 Last revised: 22 Mar 2017
Date Written: January 20, 2017
In 2009, the Securities and Exchange Commission eliminated uninstructed broker voting in director elections. We observe that average director approval rates remain high after the change in regulation, while the probability of a director being voted off the board remains low. Using event study tests we find no evidence of significant wealth effects of the change in regulation. We document that firms are increasingly letting shareholders ratify their auditors after the rule change, which helps in establishing a quorum.
Keywords: Shareholder voting, director elections, Securities and Exchange Commission, board effectiveness
JEL Classification: G34, G38
Suggested Citation: Suggested Citation