The Prevalence of Advance Notice Provisions in Corporate Bylaws

53 Pages Posted: 18 Sep 2015 Last revised: 11 Oct 2015

See all articles by Anita Anand

Anita Anand

University of Toronto - Faculty of Law

Michele Dathan

University of Toronto - Rotman School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: October 6, 2015

Abstract

In recent years, firms have implemented advance notice provisions (ANPs) in their bylaws. ANPs require shareholders to comply with certain procedures and disclosure requirements if they intend to nominate directors at a shareholders’ meeting. With a focus on ANPs, this is the first study that examines bylaw changes from an empirical standpoint. Specifically, we examine proposed and implemented bylaw amendments between 2004 and 2015 for 1,156 Canadian corporations listed on the Toronto Stock Exchange. We hypothesize that firms more vulnerable to a takeover bid or proxy contest are more likely to propose an ANP. In univariate and multivariate analysis, we find support for this hypothesis along several measures of vulnerability, including peer exposure to a proxy contest or takeover bid, industry dummies, and various measures of shareholder concentration. We do not find evidence to support an alternative hypothesis that firms propose an ANP in lock-step with others in their industry. We also examine the potential rationales for proposing an ANP using an event study. We conclude that ANPs are implemented by vulnerable firms seeking to impede a change of control.

Keywords: bylaws, corporate, advance notice provisions

JEL Classification: K00, K22

Suggested Citation

Anand, Anita and Dathan, Michele, The Prevalence of Advance Notice Provisions in Corporate Bylaws (October 6, 2015). Rotman School of Management Working Paper No. 2662688. Available at SSRN: https://ssrn.com/abstract=2662688 or http://dx.doi.org/10.2139/ssrn.2662688

Anita Anand (Contact Author)

University of Toronto - Faculty of Law ( email )

78 Queen's Park
Toronto, Ontario M5S 2C5
Canada
4169464002 (Phone)

Michele Dathan

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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