The role of shareholder proposals in corporate governance

Luc Renneboog and Peter Szilagyi

Journal of Corporate Finance, 2011, vol. 17, issue 1, 167-188

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.

Keywords: Shareholder; activism; Shareholder; proposals; Corporate; governance; Sample; selection (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (50)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:17:y:2011:i:1:p:167-188

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