When Does Shareholder Communication Matter? Evidence from Proxy Exempt Solicitations

67 Pages Posted: 18 Oct 2022 Last revised: 14 Sep 2023

See all articles by Dipesh Bhattarai

Dipesh Bhattarai

University of Tennessee, Knoxville - Department of Finance

Brian Blank

Mississippi State University

Tingting Liu

Iowa State University ; European Corporate Governance Institute (ECGI)

Kathryn M. Schumann

U.S. Securities and Exchange Commission

Tracie Woidtke

University of Tennessee, Haslam College of Business

Date Written: October 6, 2022

Abstract

This study uses a novel dataset to analyze proxy exempt solicitations (ES) as a means of shareholder communication outside formal proxy rules. The results indicate that ES can effectively reveal widespread views and are accessed by investors and investment banks at high rates. The market reacts positively to ES filings, and they are associated with improved terms for management-proposed M&A, as well as increased takeover activity, forced CEO turnover, and "no confidence" votes. Overall, these results indicate that exempt solicitations can enhance shareholder communication through increased attention and improved voting when shareholder exit and proxy contests are not viable options.

Keywords: Corporate Governance, Shareholder Communication, Shareholder Engagement, Information Dissemination, Shareholder Activism, Shareholder Voting, Mergers, Proxy Process

JEL Classification: K22, G34, G23

Suggested Citation

Bhattarai, Dipesh and Blank II, Douglas Brian and Liu, Tingting and Schumann, Kathryn M. and Woidtke, Tracie, When Does Shareholder Communication Matter? Evidence from Proxy Exempt Solicitations (October 6, 2022). Available at SSRN: https://ssrn.com/abstract=4239979 or http://dx.doi.org/10.2139/ssrn.4239979

Dipesh Bhattarai

University of Tennessee, Knoxville - Department of Finance ( email )

Knoxville, TN 37996
United States

Douglas Brian Blank II

Mississippi State University ( email )

Mississippi State, MS 39762
United States
(662) 325-5910 (Phone)

Tingting Liu

Iowa State University ( email )

2330 Gerdin Business Building
Ames, IA 50011
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Kathryn M. Schumann

U.S. Securities and Exchange Commission

Tracie Woidtke (Contact Author)

University of Tennessee, Haslam College of Business ( email )

428 Stokely Management Center
Knoxville, TN Tennessee 37996-0540
United States
865-974-1718 (Phone)
865-974-1716 (Fax)

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