Do Shareholders Vote Strategically? Voting Behavior, Proposal Screening, and Majority Rules

Ernst Maug and Kristian Rydqvist
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Ernst Maug: Chair for Corporate Finance, University of Mannheim and Sonderforschungsbereich 504, Postal: L9, 1-2, 68131 Mannheim
Kristian Rydqvist: SUNY at Binghamton - School of Management, Postal: Binghamton University, A-234, USA

No 07-35, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: We study shareholder voting on management proposals. We build on a simple model of strategic voting, provide structural estimates of its parameters, and derive testable implications. The evidence suggests that voting is strategic in the sense that shareholders take into account the information of other shareholders when making their voting decisions. We conclude that strategic voting prevents incorrect rejections of management proposals.

Pages: 47 pages
Date: 2007-06-26
New Economics Papers: this item is included in nep-cdm, nep-ict and nep-pol
Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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