Shareholder Influence Over Director Nomination Via Proxy Access: Implications for Agency Conflict and Stakeholders Value

Strategic Management Journal (2012)

Mays Business School Research Paper No. 2012-72

22 Pages Posted: 12 Jul 2012

See all articles by Joanna Tochman Campbell

Joanna Tochman Campbell

Texas A&M University - Department of Management

T. Colin Campbell

University of Cincinnati - Department of Finance - Real Estate

David G. Sirmon

Texas A&M University

Leonard Bierman

Texas A&M University - Department of Management

Christopher Tuggle

affiliation not provided to SSRN

Date Written: 2012

Abstract

Corporate governance research indicates that corporate boards of directors may be overly beholden to management, which can be detrimental to firm value creation. Drawing upon agency theory and the governance law literature, we examine the effects of a new SEC rule designed to lessen managerial power by increasing large, long-term shareholders’ influence in the director nomination process. We predict and find support for a positive overall market reaction to the rule’s announcement as well as a greater reaction for firms with characteristics that suggest compromised board independence or greater CEO control. Moreover, we examine the implications of greater shareholder voice for another key stakeholder group, firm bondholders, and find evidence that it is also value increasing. We conclude by discussing important implications for theory and practice.

Keywords: agency theory, board of directors, proxy, regulation, corporate governance

Suggested Citation

Campbell, Joanna Tochman and Campbell, Timothy Colin and Sirmon, David G. and Bierman, Leonard and Tuggle, Christopher, Shareholder Influence Over Director Nomination Via Proxy Access: Implications for Agency Conflict and Stakeholders Value (2012). Strategic Management Journal (2012), Mays Business School Research Paper No. 2012-72, Available at SSRN: https://ssrn.com/abstract=2102785

Joanna Tochman Campbell (Contact Author)

Texas A&M University - Department of Management ( email )

430 Wehner
College Station, TX 77843-4218
United States

Timothy Colin Campbell

University of Cincinnati - Department of Finance - Real Estate ( email )

College of Business Administration
Cincinnati, OH 45221
United States

David G. Sirmon

Texas A&M University ( email )

430 Wehner
College Station, TX 77843-4218
United States

Leonard Bierman

Texas A&M University - Department of Management ( email )

430 Wehner
College Station, TX 77843-4218
United States

Christopher Tuggle

affiliation not provided to SSRN ( email )

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
131
Abstract Views
1,473
rank
300,335
PlumX Metrics