Do Shareholder Meetings Matter? Evidence from the Options Market

54 Pages Posted: 17 Feb 2021 Last revised: 21 Mar 2023

See all articles by Kateryna V. Holland

Kateryna V. Holland

University of Missouri - Trulaske College of Business

Chan Lim

Tulane University

Irene Yi

University of Toronto

Date Written: March 20, 2023

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

Suggested Citation

Holland, Kateryna V. and Lim, Chan and Yi, Irene, Do Shareholder Meetings Matter? Evidence from the Options Market (March 20, 2023). Available at SSRN: https://ssrn.com/abstract=3765575 or http://dx.doi.org/10.2139/ssrn.3765575

Kateryna V. Holland (Contact Author)

University of Missouri - Trulaske College of Business ( email )

Robert J. Trulaske, Sr. College of Business
403 Cornell Hall
Columbia, MO 65211
United States

Chan Lim

Tulane University ( email )

7 McAlister Dr
New Orleans, LA 70118
United States

Irene Yi

University of Toronto ( email )

Toronto
Canada

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