Retail Shareholder Participation in the Proxy Process: Monitoring, Engagement, and Voting

78 Pages Posted: 14 Jun 2019 Last revised: 7 Jun 2021

See all articles by Alon Brav

Alon Brav

Duke University - Fuqua School of Business; European Corporate Governance Institute (ECGI); National Bureau of Economic Research (NBER)

Matthew D. Cain

Berkeley Center for Law and Business

Jonathon Zytnick

Columbia University; New York University School of Law

Date Written: May 25, 2021

Abstract

We study retail shareholder voting using a nearly comprehensive sample of U.S. ownership and voting records. Analyzing turnout within a rational choice framework, we find that participation increases with ownership and expected benefits from winning and decreases with higher costs of participation. Even shareholders with negligible likelihood of affecting the outcome have non-zero turnout, consistent with consumption benefits from voting. Conditional on participation, retail shareholders punish the management of poorly performing firms. Overall, our evidence provides support for the idea that retail shareholders utilize their voting power to monitor firms and communicate with incumbent boards and managements.

Keywords: Retail Voting, Shareholder Proposal, Proxy Advisory Firm, Corporate Governance

JEL Classification: G11, G18, G23, G34, G38, D72.

Suggested Citation

Brav, Alon and Cain, Matthew D. and Zytnick, Jonathon, Retail Shareholder Participation in the Proxy Process: Monitoring, Engagement, and Voting (May 25, 2021). European Corporate Governance Institute – Finance Working Paper No. 637/2019, Available at SSRN: https://ssrn.com/abstract=3387659 or http://dx.doi.org/10.2139/ssrn.3387659

Alon Brav

Duke University - Fuqua School of Business ( email )

100 Fuqua Drive
Durham, NC 27708-0120
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919-660-2908 (Phone)
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European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
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Belgium

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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Matthew D. Cain

Berkeley Center for Law and Business ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States

Jonathon Zytnick (Contact Author)

Columbia University ( email )

420 W. 118th Street, MC 3308
New York, NY 10027
United States

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

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