The Gradual Reveal: Understanding Shareholder Meetings through Options

60 Pages Posted: 17 Feb 2021 Last revised: 25 Oct 2023

See all articles by Kateryna V. Holland

Kateryna V. Holland

University of Missouri - Trulaske College of Business

Chan Lim

University at Buffalo (SUNY) - School of Management

Irene Yi

University of Toronto

Date Written: October 9, 2023

Abstract

We investigate the options market's reactions to proposals at shareholder meetings. We observe a consistent decrease in option implied volatility from the record to the meeting date, indicating reduced uncertainty about future stock prices. Meetings with close votes and shareholder proposals exhibit a distinct peak before the record date, followed by a more significant yet gradual decline. This decline is pronounced for meetings with high voting premiums and stakeholder disagreements. Our findings highlight proposals' substantial impact on firm value, with investors processing most proposal-related information before the meeting, expanding our understanding beyond the literature's conventional focus around key event dates.

Keywords: shareholder meetings; shareholder proposals; management proposals; implied volatility; record date

JEL Classification: G14, G30, G34

Suggested Citation

Holland, Kateryna V. and Lim, Chan and Yi, Irene, The Gradual Reveal: Understanding Shareholder Meetings through Options (October 9, 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

University at Buffalo (SUNY) - School of Management ( email )

255 Jacobs Management Center
Buffalo, NY 14260
United States

Irene Yi

University of Toronto ( email )

Toronto
Canada

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