Shareholder Meetings Matter: Evidence from the Options Market

Abstract

Extant literature finds insignificant abnormal returns around shareholder meetings. We verify those findings but show that option implied volatility gradually declines by about 1.04 percent between record and meeting dates and then by about 0.30 percent right after annual meetings. These declines occur even if meetings do not have shareholder proposals or close votes. The post-meeting decline is more pronounced for meetings with close-call shareholder proposals. Our evidence indicates that investors anticipate meeting outcomes to affect stock prices and that shareholder proposals are consequential but have heterogeneous value implications.

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

JEL Classification: G14, G30, G34