Why do Investors Vote Against Corporate Directors?

67 Pages Posted: 17 Jul 2023 Last revised: 3 Jan 2024

See all articles by Reena Aggarwal

Reena Aggarwal

Georgetown University - Robert Emmett McDonough School of Business ; European Corporate Governance Institute (ECGI)

Sandeep Dahiya

Georgetown University - Department of Finance

Umit Yilmaz

Georgetown University - McDonough School of Business

Date Written: July 1, 2023

Abstract

Investors now hold directors responsible for newer issues like climate change and board diversity. Within the environment category, climate change is the only subcategory associated with voting outcome, whereas none of the social issues are relevant. Governance remains important; however, our proxy differs markedly from traditional measures. Institutional investors have begun to provide rationales for their votes to convey preferences. Dissent votes increase when they express concerns about board diversity, busyness, tenure, and independence. Female directors generally receive fewer dissent votes, except for those with a long tenure. The presence of a shareholder proposal correlates with reduced support.

Keywords: Institutional Investors, Proxy Voting, Director Elections, Board Diversity, Climate Change

JEL Classification: G32; G34; G38

Suggested Citation

Aggarwal, Reena and Dahiya, Sandeep and Yilmaz, Umit, Why do Investors Vote Against Corporate Directors? (July 1, 2023). European Corporate Governance Institute – Finance Working Paper No. 924/2023, Georgetown McDonough School of Business Research Paper No. 4502527, Available at SSRN: https://ssrn.com/abstract=4502527 or http://dx.doi.org/10.2139/ssrn.4502527

Reena Aggarwal (Contact Author)

Georgetown University - Robert Emmett McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States
202-687-3784 (Phone)
202-687-0798 (Fax)

HOME PAGE: http://https://gufaculty360.georgetown.edu/s/contact/00336000014RhE9AAK/reena-aggarwal

European Corporate Governance Institute (ECGI) ( email )

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

Sandeep Dahiya

Georgetown University - Department of Finance ( email )

3700 O Street, NW
Washington, DC 20057
United States
202-687-3832 (Phone)

Umit Yilmaz

Georgetown University - McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

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