The Efficacy of Shareholder Voting in Staggered and Non-Staggered Boards: The Case of Audit Committee Elections

43 Pages Posted: 19 Oct 2014 Last revised: 4 Nov 2015

See all articles by Ronen Gal-Or

Ronen Gal-Or

Bentley University - Department of Accountancy

Rani Hoitash

Bentley University - Department of Accountancy

Udi Hoitash

Northeastern University - Accounting Group

Date Written: October 31, 2015

Abstract

We examine whether shareholder votes can influence the audit committee and whether this influence is uniform across non-staggered and staggered boards. We find that through voting, shareholders can increase the efficacy of the audit committee, leading to improvements in audit committee structure, diligence, and financial reporting quality. These results hold only in firms with non-staggered boards, underscoring the need to separately examine staggered and non-staggered boards. Importantly, the non-responsiveness of staggered audit committees to shareholder disapproval presents an additional explanation for the weaker performance that is often documented for firms with staggered boards. Overall, our results support the movement to de-stagger boards.

Keywords: Staggered Boards, Director Elections, Audit Committee, Proxy Advisors

JEL Classification: M41, G34

Suggested Citation

Gal-Or, Ronen and Hoitash, Rani and Hoitash, Udi, The Efficacy of Shareholder Voting in Staggered and Non-Staggered Boards: The Case of Audit Committee Elections (October 31, 2015). Auditing: A Journal of Practice & Theory, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2511480 or http://dx.doi.org/10.2139/ssrn.2511480

Ronen Gal-Or

Bentley University - Department of Accountancy ( email )

175 Forest Street
Waltham, MA 02452
United States

Rani Hoitash (Contact Author)

Bentley University - Department of Accountancy ( email )

175 Forest Street
Waltham, MA 02452-4705
United States

Udi Hoitash

Northeastern University - Accounting Group ( email )

360 Huntington Ave.
Boston, MA 02115
United States
671-373-5839 (Phone)

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