SEC Rule 14a-8 Shareholder Proposals: No-Action Requests, Determinants, and the Role of SEC Staff
65 Pages Posted: 23 Dec 2020 Last revised: 8 Mar 2022
Date Written: November 28, 2020
Under SEC Rule 14a-8, shareholders have the right to petition management to include a topic for vote on the annual proxy statement. In response, management may request no-action relief from the Securities and Exchange Commission (SEC) staff to exclude unwelcome proposals. Using a sample of 3,040 no-action letter responses from the SEC between 2008 and 2019, I examine the determinants of the SEC staff’s decision to grant no-action relief. I find the legal characteristics, pressures on the SEC staff, and proposal attributes have a statistically significant association with the SEC’s decision. Beyond these factors, I find evidence individual SEC staff members differ in the likelihood they grant no-action relief. On average, these staff members appear to add value as evidenced by a positive market response to their decisions, but this favorable valuation effect is concentrated among relatively more experienced staff.
Keywords: Securities and Exchange Commission (SEC), No-Action Letters, Rule 14a-8, Shareholder Proposals, Corporate Governance, SEC staff experience
JEL Classification: M4, M40, M41, M48, K2, K22, G3, G34, G38
Suggested Citation: Suggested Citation