Corporate Governance Proposals and Shareholder Activism: The Role of Institutional Investors
Posted: 9 May 1998
Date Written: July 1998
We study shareholder proposals across a period of substantial activity and find systematic differences both across sponsor identity and across time. To understand how these proposals are perceived by other investors, we examine voting outcomes and short-term market reactions conditioned on proposal type and sponsor identity. The voting analysis documents that sponsor identity, issue type, prior performance and time period are important influences on the voting outcome. Moreover, it appears that proposals by institutional and coordinated activists act as substitutes. The nature of the stock market reaction, while typically small, varies according to the issue and the sponsor identity.
JEL Classification: G34
Suggested Citation: Suggested Citation