Corporate Governance through the Proxy Contest: Evidence and Implications

David Ikenberry and Josef Lakonishok

The Journal of Business, 1993, vol. 66, issue 3, 405-35

Abstract: The current literature concerning proxy contests provides little evidence that shareholders suffer materially from sub par performance prior to a contest. Furthermore, no study has thoroughly examined the long-term performance of targeted firms subsequent to a proxy contest. Using a sample of ninety-seven election contests during the period 1968-87, the authors find negative abnormal returns and deteriorating operating performance prior to the announcement of a contest. Following the contest, negative abnormal returns are observed. These negative returns are driven by cases in which dissident shareholders successfully acquire board seats. The results for accounting-based operating performance measures confirm these findings. Copyright 1993 by University of Chicago Press.

Date: 1993
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