Does Shareholder Proxy Access Improve Firm Value? Evidence from the Business Roundtable Challenge

50 Pages Posted: 3 Feb 2012

See all articles by Bo Becker

Bo Becker

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); ECGI

Daniel Bergstresser

Brandeis International Business School

Guhan Subramanian

Harvard Business School

Multiple version iconThere are 2 versions of this paper

Date Written: February 2012

Abstract

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.

Suggested Citation

Becker, Bo and Bergstresser, Daniel B. and Subramanian, Guhan, Does Shareholder Proxy Access Improve Firm Value? Evidence from the Business Roundtable Challenge (February 2012). NBER Working Paper No. w17797. Available at SSRN: https://ssrn.com/abstract=1998597

Bo Becker (Contact Author)

Stockholm School of Economics ( email )

Drottninggatan 98
Dept. of Finance
111 60 Stockholm, 11160
Sweden

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

ECGI ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Daniel B. Bergstresser

Brandeis International Business School ( email )

Waltham, MA 02454
United States
6174162324 (Phone)

Guhan Subramanian

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
617-495-9784 (Phone)
617-496-7379 (Fax)

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