When Shareholders Disagree: Trading After Shareholder Meetings

79 Pages Posted: 31 Jan 2021 Last revised: 2 Apr 2021

See all articles by Sophia Zhengzi Li

Sophia Zhengzi Li

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick

Ernst G. Maug

University of Mannheim Business School; European Corporate Governance Institute (ECGI)

Miriam Schwartz-Ziv

Hebrew University of Jerusalem - Department of Finance and Banking; ECGI (European Corporate Governance Institute)

Date Written: March 25, 2021

Abstract

This paper analyzes how trading after shareholder meetings changes the composition of the shareholder base. Analyzing daily trades, we find that mutual funds reduce their holdings if their votes are opposed to the voting outcome. Trading volume is high even when stock prices do not change, peaks on the meeting date, and remains high up to four weeks after shareholder meetings. The results support models based on differences of opinion, which predict that shareholders’ beliefs may diverge more after observing voting outcomes. Hence, trading after meetings creates a more homogeneous shareholder base, which has important implications for corporate governance.

Keywords: Shareholder Meetings, Voting, Disagreement, Trading, Volume

JEL Classification: G11, G12, G14, G30, G40

Suggested Citation

Li, Sophia Zhengzi and Maug, Ernst G. and Schwartz-Ziv, Miriam, When Shareholders Disagree: Trading After Shareholder Meetings (March 25, 2021). Forthcoming in the Review of Financial Studies, Fifth Annual Conference on Financial Market Regulation, European Corporate Governance Institute (ECGI) - Finance Working Paper No. 594/2019, Available at SSRN: https://ssrn.com/abstract=3095745 or http://dx.doi.org/10.2139/ssrn.3095745

Sophia Zhengzi Li

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick ( email )

100 Rockafeller Rd
Piscataway, NJ 08854
United States

Ernst G. Maug (Contact Author)

University of Mannheim Business School ( email )

L9, 1-2
Mannheim, 68131
Germany
+49 621 181-1952 (Phone)

HOME PAGE: http://cf.bwl.uni-mannheim.de/de/people/maug/

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Miriam Schwartz-Ziv

Hebrew University of Jerusalem - Department of Finance and Banking ( email )

Mount Scopus
Jerusalem, 91905
Israel

ECGI (European Corporate Governance Institute) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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