Management (of) Proposals

65 Pages Posted: 20 Apr 2018 Last revised: 20 Dec 2018

See all articles by Ilona Babenko

Ilona Babenko

Arizona State University

Goeun Choi

Arizona State University (ASU) - Finance Department

Rik Sen

University of New South Wales (UNSW)

Date Written: December 19, 2018


Using shareholder voting records on management proposals for the period 2003--2015, we study whether the voting process is unbiased. We find evidence of vote manipulation by management. Specifically, the frequency of proposals that receive votes just above the threshold for passage is significantly greater than the frequency of proposals that do not pass. The strategic behavior by management is more pronounced for firms with low institutional ownership and less independent boards and for proposals receiving a negative ISS recommendation. We identify new mechanisms by which executives use their access to real-time vote information to influence the outcome, such as by adjourning a meeting and selective campaigning. Finally, our empirical results indicate that passage of a marginal management proposal does not create shareholder value. Using the theoretical framework, we show that this result implies that managerial influence on the voting process is value-destroying.

Keywords: Corporate Voting, Management Proposals, Shareholder Proposals, Short-Selling Constraints, Manipulation

Suggested Citation

Babenko, Ilona and Choi, Goeun and Sen, Rik, Management (of) Proposals (December 19, 2018). Available at SSRN: or

Ilona Babenko (Contact Author)

Arizona State University ( email )

Department of Finance
W.P. Carey School of Business
Tempe, AZ 85287
United States

Goeun Choi

Arizona State University (ASU) - Finance Department ( email )

W. P. Carey School of Business
PO Box 873906
Tempe, AZ 85287-3906
United States

Rik Sen

University of New South Wales (UNSW) ( email )

High St
Sydney, NSW 2052

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