Ballot Order Effects in Independent Director Elections

40 Pages Posted: 18 Oct 2021 Last revised: 15 Sep 2022

See all articles by Tanja Artiga González

Tanja Artiga González

VU University Amsterdam

Paul Calluzzo

Queen's University - Smith School of Business

Georg D. Granic

Erasmus University Rotterdam (EUR) - Department of Applied Economics; Tinbergen Institute

Date Written: September 15, 2022

Abstract

We examine ballot order effects in independent director elections. Our results show that down-ballot directors receive considerably less opposition from shareholders. This result holds in a sample where directors are positioned alphabetically on the proxy ballot, and, thus unrelated to the directors’ ability or position on the board. We find that the ballot order effect strengthens in settings where the ballot is more complex and shareholders are less attentive. These results suggest that investors, confronted with repeated decision making across multiple proxy votes, are subject to choice fatigue that affects their voting patterns when electing directors. Furthermore, we find that the ballot order effect impacts director career concerns; although down-ballot directors are less likely to receive shareholder opposition, when they are opposed, they are more likely to leave the board. These findings, which document a systematic bias in the proxy voting process, are relevant to regulators and practitioners given the impact proxy voting has on firm governance.

Keywords: Ballot Order, Choice Fatigue, Proxy Voting, ISS Recommendations

Suggested Citation

Artiga Gonzalez, Tanja and Calluzzo, Paul and Granic, Georg, Ballot Order Effects in Independent Director Elections (September 15, 2022). Available at SSRN: https://ssrn.com/abstract=3944796 or http://dx.doi.org/10.2139/ssrn.3944796

Tanja Artiga Gonzalez (Contact Author)

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, North Holland 1081 HV
Netherlands

Paul Calluzzo

Queen's University - Smith School of Business ( email )

Smith School of Business - Queen's University
143 Union Street
Kingston, Ontario K7L 3N6
Canada

Georg Granic

Erasmus University Rotterdam (EUR) - Department of Applied Economics ( email )

Netherlands

HOME PAGE: http://https://www.eur.nl/en/ese/people/georg-granic

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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