Interim News and the Role of Proxy Voting Advice

Cindy R. Alexander, Mark A. Chen, Duane J. Seppi and Chester S. Spatt

The Review of Financial Studies, 2010, vol. 23, issue 12, 4419-4454

Abstract: This article examines the information content and consequences of third-party voting advice that arrives as news at an interim stage in corporate proxy contests. We first document significant stock returns around announcements of proxy vote recommendations. We then develop a multi-equation empirical procedure for disentangling the price impact of prediction effects (changes in contest outcome probabilities) from the price impact of certification effects (changes in outcome-contingent valuations). Both effects are present in the data: Voting advice is both predictive about contest outcomes and informative about the ability of dissidents to add value. Consequently, proxy advice plays a dual informational role. , Oxford University Press.

Date: 2010
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