Managerial response to shareholder empowerment: evidence from majority- voting legislation changes

Vicente Cuñat, Yiqing Lu and Hong Wu

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper studies how managers react to shareholder empowerment that makes the votes on shareholder proposals regarding majority-voting director elections binding. Exploiting staggered legislative changes that introduce such empowerment, we find that managers become more responsive by initiating majority voting through either management proposals or governance guidelines. Further results suggest compromised implementation: managers adopt provisions that give them greater control over the channel of implementation and allow them to retain directors who fail in elections. Managers show the greatest resistance to implementing majority-voting standards when shareholder value is likely to suffer more or benefit less from the legislation.

Keywords: corporate governance; majority voting; shareholder activism; shareholder empowerment (search for similar items in EconPapers)
JEL-codes: G14 G34 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2021-02-15
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http://eprints.lse.ac.uk/118896/ Open access version. (application/pdf)

Related works:
Working Paper: Managerial response to shareholder empowerment: evidence from majority-voting legislation changes (2023)
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