The role of shareholder proposals in corporate governance

L.D.R. Renneboog, P.G. Szilagyi

Research output: Contribution to journalArticleScientificpeer-review

56 Citations (Scopus)

Abstract

This paper examines the corporate governance role of shareholder-initiated proxy proposals. We find that target firms tend to underperform and have generally poor governance structures, with little indication of systematic agenda-seeking by the proposal sponsors. Governance quality also affects the voting outcomes and the announcement period stock price effects, with the latter strongest for first-time submissions and during stock market peaks. Proposal implementation is largely a function of voting success but is affected by managerial entrenchment and rent-seeking. The results imply that shareholder proposals are a useful device of external control, countering arguments that they should be restricted rather than facilitated under the SEC's current regulatory agenda.
Original languageEnglish
Pages (from-to)167-188
Number of pages22
JournalJournal of Corporate Finance
Volume17
Issue number1
DOIs
Publication statusPublished - 2011

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