Management (of) Proposals
58 Pages Posted: 20 Apr 2018 Last revised: 22 Dec 2019
Date Written: June 7, 2019
Using shareholder voting records on management proposals, we find evidence of managerial influence on outcomes of close votes as there are significantly more proposals that narrowly pass than narrowly fail. This behavior is more pronounced for firms with low institutional ownership and for proposals receiving a negative ISS recommendation. We identify new mechanisms by which managers influence the outcome, such as meeting adjournment and selective campaigning. Finally, the market reacts more positively to the narrow failure of management proposals than to their passage. Combined with our theoretical model, these results imply that managerial influence on the voting process is value-destroying.
Keywords: Corporate Voting, Management Proposals, Shareholder Proposals, Manipulation
JEL Classification: G30, G34, G38
Suggested Citation: Suggested Citation