Do Shareholder Meetings Matter? Evidence from the Options Market
54 Pages Posted: 17 Feb 2021 Last revised: 21 Mar 2023
Date Written: March 20, 2023
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: Suggested Citation