Disloyal managers and proxy voting

Xianjue Wang

Finance Research Letters, 2022, vol. 44, issue C

Abstract: We examine how proxy voting responds to increased agency cost with an intention-to-treat analysis. Using staggered adoption of Corporate Opportunities Waiver laws that erode the fiduciary duty when managers (including directors) appropriate business opportunities from focal firms, we find that shareholders are less likely to support contentious incumbent director elections, especially in more established firms and firms with more outside opportunities. Moreover, we show that proxy voting by long-term institutional investors contributes to this effect. Overall, our results suggest that shareholders respond to increased agency cost with increased monitoring.

Keywords: Corporate opportunities waiver; Proxy voting; Agency cost; Long-term institutional investor; Mutual fund (search for similar items in EconPapers)
JEL-codes: G23 G34 K22 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:44:y:2022:i:c:s1544612321005729

DOI: 10.1016/j.frl.2021.102636

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