An Empirical Analysis of Advance Notice Provisions in Corporate Bylaws: Evidence from Canada

53 Pages Posted: 3 Nov 2016

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: September 2016

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 hand collected a comprehensive list of 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 exposure or peer exposure to a proxy contest or takeover bid and various measures of shareholder dispersion. We also 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, potentially seeking to impede a change of control, as well as by firms following industry peers making corporate governance changes.

Suggested Citation

Anand, Anita and Dathan, Michele, An Empirical Analysis of Advance Notice Provisions in Corporate Bylaws: Evidence from Canada (September 2016). International Review of Law and Economics, 2017, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2863086

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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