The role of shareholder proposals in corporate governance

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

Research output: Contribution to journalArticleScientificpeer-review

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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Corporate governance
Shareholders
Agenda
Voting
Announcement
Governance
Managerial entrenchment
Rent-seeking
Sponsor
Stock prices
Stock market
Price effects
Governance structure

Cite this

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The role of shareholder proposals in corporate governance. / Renneboog, L.D.R.; Szilagyi, P.G.

In: Journal of Corporate Finance, Vol. 17, No. 1, 2011, p. 167-188.

Research output: Contribution to journalArticleScientificpeer-review

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