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Quorum Rules and Shareholder Power

Patricia Charléty, Marie-Cécile Fagart and Saïd Souam ()

No 2017-35, EconomiX Working Papers from University of Paris West - Nanterre la Defense, EconomiX

Abstract: This paper characterizes the equilibria of a costly voting game in which shareholders heterogeneous in both size and preferences strategically vote for or against a proposed resolution or withhold. It is shown that a minimum quorum generates (1) equilibria in which one or several shareholders form voting coalitions in favor of the resolution that is adopted (2) an equilibrium in which shareholders strategically abstain from voting and the resolution is rejected. The size of blockholders and their preferences (in favor or against the resolution) play a crucial role in the existence of equilibria, their nature, the size and the number of voters in coalitions. We derive conditions under which the dominant shareholder controls the meeting. We also examine how large shareholders influence the result of the vote. In particular, we analyze the interaction between blockholders and discuss the situations in which large shareholders jointly control annual meetings or form coalitions to counter the dominant shareholder.

Keywords: Shareholder Meeting; Strategic voting; Coalitions; Quorum rule; Dominant; Controlling and Reference shareholders. (search for similar items in EconPapers)
JEL-codes: D72 G34 K16 K20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-des, nep-gth and nep-law
Date: 2017
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Persistent link: http://EconPapers.repec.org/RePEc:drm:wpaper:2017-35

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