Management (of) Proposals

57 Pages Posted: 20 Apr 2018 Last revised: 9 Jun 2019

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: June 7, 2019

Abstract

Using shareholder voting records on management proposals, we find evidence of vote manipulation by management as there are significantly more proposals that narrowly pass than narrowly fail. The strategic behavior by management is more pronounced for firms with low institutional ownership and for proposals receiving a negative ISS recommendation. We identify new mechanisms by which executives influence the outcome, such as meeting adjournment and selective campaigning. Finally, the market reacts more positively to the narrow failure of management proposals than to their passage. Combined with our theoretical model, these results
imply that managerial influence on the voting process is value-destroying.

Keywords: Corporate Voting, Management Proposals, Shareholder Proposals, Manipulation

JEL Classification: G30, G34, G38

Suggested Citation

Babenko, Ilona and Choi, Goeun and Sen, Rik, Management (of) Proposals (June 7, 2019). Available at SSRN: https://ssrn.com/abstract=3155428 or http://dx.doi.org/10.2139/ssrn.3155428

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 )

Kensington
High St
Sydney, NSW 2052
Australia

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