How Do Shareholder Proposals Create Value?

74 Pages Posted: 9 Apr 2013 Last revised: 16 Apr 2017

See all articles by Laurent Bach

Laurent Bach

ESSEC Business School - Finance Department; Swedish House of Finance

Daniel Metzger

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM); European Corporate Governance Institute (ECGI); London School of Economics & Political Science (LSE) - Financial Markets Group

Multiple version iconThere are 3 versions of this paper

Date Written: March 1, 2017

Abstract

Shareholder votes may create value because they force boards to implement proposals’ content or because they signal shareholders’ discontent. In order to distinguish these hypotheses, we collect data on the implementation of shareholder proposals. We show that the decision to implement proposals and the launch of vote-no campaigns are triggered by separate majority thresholds. Using a regression discontinuity design, we find that there is a positive stock market reaction to majority votes when the result triggers further vote-no campaigns. In contrast, we do not detect any effect of a majority vote when it only pushes managers to implement a proposal.

Keywords: Shareholder Activism, CEO Turnovers, Director Elections, Shareholder Proposals, Shareholder Organizations

Suggested Citation

Bach, Laurent and Metzger, Daniel, How Do Shareholder Proposals Create Value? (March 1, 2017). Available at SSRN: https://ssrn.com/abstract=2247084 or http://dx.doi.org/10.2139/ssrn.2247084

Laurent Bach (Contact Author)

ESSEC Business School - Finance Department ( email )

Avenue Bernard Hirsch
BP 105 Cergy Cedex, 95021
France

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

Daniel Metzger

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

European Corporate Governance Institute (ECGI) ( email )

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

London School of Economics & Political Science (LSE) - Financial Markets Group ( email )

Houghton Street
London WC2A 2AE
United Kingdom

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