A Theory of Shareholder Approval and Proposal Rights
John Matsusaka () and
The Journal of Law, Economics, and Organization, 2017, vol. 33, issue 2, 377-411
This paper develops a theory of how shareholder decision rights over policies and directors affect firm value. The model highlights the distinction between the right to approve and the right to propose. The right to approve is weak; the right to propose is impactful but can help as well as hurt shareholders. Managers have an incentive to deter proposals from activist shareholders by adjusting corporate policy; one might conjecture that external pressure leads them to choose policies more appealing to other shareholders in order to reduce the electoral prospects of activist proposals. However, we show that when deterrence occurs, it is always by moving policy toward the position favored by the activist, even if this reduces shareholder wealth. Our analysis stresses the central role of voting uncertainty in determining the value consequences of shareholder rights and proxy access. (JEL D72, G34, G38, K22)
JEL-codes: D72 G34 G38 K22 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:oup:jleorg:v:33:y:2017:i:2:p:377-411.
Ordering information: This journal article can be ordered from
Access Statistics for this article
The Journal of Law, Economics, and Organization is currently edited by Andrea Prat
More articles in The Journal of Law, Economics, and Organization from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().