Intermediary power in corporate elections and the value of shareholder proposals: a quasi-natural experiment

Abstract

I examine the impact of a vote tabulation firm’s decision to withhold interim vote tally data from proposal sponsors on shareholder proposals in corporate elections. The results show a positive market response to the decision, particularly among firms that used the vote tabulation firm for vote tallying. The results also reveal a decline in support for shareholder proposals. These findings suggest that the decision weakened shareholders’ ability to secure a majority vote for their proposals and reduced the likelihood of proposal implementation. The results also emphasize the importance of understanding the role of intermediaries in corporate affairs and their implications for shareholder value and provide initial evidence that vote-counting procedures—that should have no impact on the outcome—indeed could influence the functioning of shareholder rights.

Keywords: shareholder proposals; shareholder rights; governance; shareholder voting; vote tabulation firms

JEL Classification: G34