Do Shareholder Meetings Matter? Evidence from the Options Market

Abstract

This paper examines the value and timing of information released during shareholder meetings using options. In contrast to studies that report insignificant market reactions around these meetings, we provide evidence that shareholder meetings indeed matter. Our findings indicate that option prices peak around the record date and decline leading up to the meeting date, suggesting that information on meeting agendas and voting outcomes is not immediately absorbed by the market but is instead aggregated gradually throughout the meeting cycle. The decline in option prices is quantitatively substantial, varies by proposal topic and contentiousness level, and persists even after controlling for voting premiums and borrowing fees. Our results suggest that previous studies may have underestimated the value of shareholder meetings by relying solely on event returns.

Keywords: Shareholder Meetings, Voting, Uncertainty, Implied Volatility, Market Performance

JEL Classification: G14, G30, G34