What I Like About You: A Multilevel Study of Shareholder Discontent with Director Monitoring

Amy J. Hillman (), Christine Shropshire (), S. Trevis Certo (), Dan R. Dalton () and Catherine M. Dalton ()
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Amy J. Hillman: W. P. Carey School of Business, Arizona State University, Tempe, Arizona 85287
Christine Shropshire: Department of Management, Terry College of Business, University of Georgia, Athens, Georgia 30602
S. Trevis Certo: W. P. Carey School of Business, Arizona State University, Tempe, Arizona 85287
Dan R. Dalton: Kelley School of Business, Indiana University, Bloomington, Indiana 47405
Catherine M. Dalton: Kelley School of Business, Indiana University, Bloomington, Indiana 47405

Organization Science, 2011, vol. 22, issue 3, 675-687

Abstract: Each year shareholders, via exercise of their proxy votes, have the opportunity to voice their support or displeasure with firms and director nominees. Examining over 2,000 Fortune 500 director nominees, we explore those indicators available to shareholders at the time of directors' (re)election to provide insight into shareholder discontent with director monitoring. By studying actual voting behaviors, we provide new perspective to understanding director elections as a governance process. Employing a multilevel approach, we find support for agency-theoretic relationships between several firm and director characteristics and shareholder opposition to directors seeking (re)election to the board. At the firm level, we find that CEO compensation level and board size are positively related to the withholding of shareholder votes in director elections, a behavior indicative of shareholder discontent. Complementing these findings, at the director level, we find that affiliated director status, tenure, and number of outside directorships are positively related, and director block ownership is negatively related to shareholder discontent with director monitoring.

Keywords: boards of directors; monitoring; shareholders (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:22:y:2011:i:3:p:675-687

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