The Power of Shareholder Votes: Evidence from Uncontested Director Elections

52 Pages Posted: 23 May 2015 Last revised: 24 Mar 2017

See all articles by Reena Aggarwal

Reena Aggarwal

Georgetown University - Robert Emmett McDonough School of Business

Sandeep Dahiya

Georgetown University - Department of Finance

Nagpurnanand Prabhala

The Johns Hopkins Carey Business School

Date Written: March 22, 2016

Abstract

This paper asks the question whether dissent votes in uncontested director elections have consequences for directors. We show that, contrary to popular belief based on prior studies, shareholder votes have power and result in negative consequences for directors. Directors facing dissent are more likely to depart boards, especially if they are not lead directors or chairs of important committees. Directors facing dissent who do not leave are moved to less prominent positions on boards. Finally, we find evidence that directors facing dissent face reduced opportunities in the market for directors. We also find that the effects of dissent votes go beyond those of proxy advisor recommendations.

Keywords: director elections; director reputation; shareholder voting; proxy advisor

JEL Classification: G3, G32, G34, K22, L51

Suggested Citation

Aggarwal, Reena and Dahiya, Sandeep and Prabhala, Nagpurnanand, The Power of Shareholder Votes: Evidence from Uncontested Director Elections (March 22, 2016). Robert H. Smith School Research Paper No. RHS 2609532; Georgetown McDonough School of Business Research Paper No. 2609532. Available at SSRN: https://ssrn.com/abstract=2609532 or http://dx.doi.org/10.2139/ssrn.2609532

Reena Aggarwal (Contact Author)

Georgetown University - Robert Emmett McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States
202-687-3784 (Phone)
202-687-0798 (Fax)

HOME PAGE: http://explore.georgetown.edu/people/aggarwal/

Sandeep Dahiya

Georgetown University - Department of Finance ( email )

3700 O Street, NW
Washington, DC 20057
United States
202-687-3832 (Phone)

Nagpurnanand Prabhala

The Johns Hopkins Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States
+1 410 234 4532 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
527
rank
49,358
Abstract Views
2,480
PlumX Metrics