Virtual Shareholder Meetings

Abstract

We examine determinants and consequences of ‘virtual’ shareholder meetings (VSM), using a sample of voluntary (pre-Covid) and forced (i.e. due to Covid) VSM adopters. Voluntary adopters are tech firms, and firms traditionally more engaged with shareholders, consistent with the stated objective to increase shareholder participation. In contrast, we do not find that firms choose the virtual format to avoid shareholders’ scrutiny. Textual analysis of transcripts suggests that in VSM business presentations by management are less frequent, shorter and more generic, but only among voluntary adopters, suggesting that these properties reflect a firm’s choice rather than a byproduct of the virtual format per se. VSM are more likely to exhibit no questions during the Q&A, but conditioned upon having one question, they exhibit the same number of questions, and such questions are more negative in tone, inconsistent with managers’ using the virtual format to filter out hostile questions. Finally, there is some evidence of greater abnormal absolute returns around VSM, supporting the notion that greater attendance translates into greater information content. Overall, VSM exhibit less activity on average, consistent with critics’ concerns, but such reduced activity does not appear to cause a loss in information content nor to reflect an attempt to avoid scrutiny.

Keywords: virtual shareholder meetings, annual shareholder meetings, corporate governance, shareholder engagement, investor relations

JEL Classification: G34, G30, M40