Can Shareholder Proposals Hurt Shareholders? Evidence from SEC No-Action Letter Decisions
37 Pages Posted: 8 Dec 2016 Last revised: 24 Jan 2018
Date Written: January 2018
This paper studies the market reaction to SEC no-action letter decisions that determine whether a shareholder proposal can be excluded from the proxy statement. We find that over the period 2007-2016, the market reacted positively when the SEC permitted exclusion. Investors appear to have been most skeptical about proposals related to corporate governance and proposals at high-profit firms, suggesting that investors believe some proposals can hurt shareholders by disrupting companies that are already performing well.
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