Management (of) Proposals
64 Pages Posted: 20 Apr 2018
Date Written: April 3, 2018
We study factors that motivate executives to put up new management proposals for shareholder voting and examine whether the voting process is biased. Using shareholder voting records from 2003 to 2015, we find that firms with tighter short-selling constraints and better recent performance launch more management proposals. Shareholder activism can also trigger management proposals, especially if shareholders target governance issues. However, we find evidence of manipulation of voting outcomes by management as the frequency of proposals receiving votes slightly above the passing threshold is three times higher than those slightly below. The manipulation is more pronounced for special meetings, firms with low institutional ownership and less independent boards, and for proposals with a negative ISS recommendation. We identify several mechanisms by which executives influence the voting outcome in their favor, such as meeting adjournment and selective campaigning.
Keywords: Corporate Voting, Management Proposals, Shareholder Proposals, Short-Selling Constraints
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