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Of What Value Are Shareholder Proposals Sponsored by Public Pension Funds?

Andrew K Prevost and Ramesh Rao ()

The Journal of Business, 2000, vol. 73, issue 2, 177-204

Abstract: This study finds that public pension fund proposals act as a signaling mechanism in alerting the market that management is unwilling or unable to negotiate a settlement with the public fund in order to prevent the submission of the proposal. We find that firms receiving proposals for the first time experience a transitory decrease in shareholder wealth, while firms targeted repeatedly exhibit negative wealth effects over much wider event windows. Long-run changes in the firms' operating performance and stock price returns are consistent with these results. A comparison of corporate governance characteristics provides further insight into our findings. Copyright 2000 by University of Chicago Press.

Date: 2000
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