Uncertainty, Information, and Shareholder Democracy: Evidence from Voting on Shareholder Proposals

53 Pages Posted: 8 Nov 2017 Last revised: 9 Jun 2019

See all articles by Xiao Li

Xiao Li

Central University of Finance and Economics (CUFE) - School of Accountancy

Jeffrey Ng

Hong Kong Polytechnic University - School of Accounting and Finance

Hong Wu

Fudan University - School of Economics

Date Written: June 2019

Abstract

An integral aspect of shareholder democracy is the shareholder proposal process, through which shareholders can pressure firms to make changes. We find that shareholders’ uncertainty about the firm reduces their participation in voting on shareholder proposals and also reduces the likelihood of the proposals’ passage and implementation. In further analyses, we find that the negative effects of uncertainty on the shareholder proposal process are mitigated when there is comparable peer information and more information intermediation. Overall, our paper provides new insight into the role of shareholder uncertainty and the information environment in a shareholder democracy.

Keywords: shareholder activism, shareholder proposals, peer information

JEL Classification: M41

Suggested Citation

Li, Xiao and Ng, Jeffrey and Wu, Hong, Uncertainty, Information, and Shareholder Democracy: Evidence from Voting on Shareholder Proposals (June 2019). Available at SSRN: https://ssrn.com/abstract=3066006 or http://dx.doi.org/10.2139/ssrn.3066006

Xiao Li

Central University of Finance and Economics (CUFE) - School of Accountancy ( email )

Beijing
China

Jeffrey Ng

Hong Kong Polytechnic University - School of Accounting and Finance ( email )

Hung Hom
Kowloon
Hong Kong

Hong Wu (Contact Author)

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China

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