Management Always Wins the Close Ones

42 Pages Posted: 20 Apr 2007 Last revised: 13 Jul 2008

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While much has been made of "shareholder democracy" as a lever of corporate governance, there is little evidence about the efficacy of voting. This paper empirically examines votes on management-sponsored resolutions and finds widespread irregularities in the distribution of votes received by management. Management is overwhelmingly more likely to win votes by a small margin than to lose by a small margin. The results indicate that, at some point in the voting process, management obtains highly accurate information about the likely voting outcome and, based on that information, acts to influence the vote. The precise point at which this occurs is unclear, though it is likely to be near the "poll closing" time. Whatever the cause of management's advantage, it is clear that shareholder voting does not constitute a "representative" direct democracy.

Keywords: corporate voting, corporate governance, management, fraud

JEL Classification: G3, G34, G38

Suggested Citation

Listokin, Yair, Management Always Wins the Close Ones. Yale Law & Economics Research Paper No. 348; 2nd Annual Conference on Empirical Legal Studies Paper; American Law and Economics Review, Forthcoming. Available at SSRN:

Yair Listokin (Contact Author)

Yale Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States
203-436-2567 (Phone)

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