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: We study how managers react to shareholder empowerment that makes votes on shareholder proposals binding. We empirically exploit staggered legislative changes that introduce such empowerment for proposals regarding majority voting in director elections. We find that managers become more responsive to shareholder requirements by initiating majority voting through either management proposals or governance guidelines. This early action crowds out shareholder proposals. 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. Our results suggest that managers retain substantial discretion to modulate shareholder requirements. This article was partially completed when Wu was at Fudan University. Any errors are attributable solely to the authors.

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: 26 pages
Date: 2025-03-18
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Journal of Financial and Quantitative Analysis, 18, March, 2025. ISSN: 0022-1090

Downloads: (external link)
http://eprints.lse.ac.uk/120742/ Open access version. (application/pdf)

Related works:
Working Paper: Managerial response to shareholder empowerment: evidence from majority- voting legislation changes (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:120742

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().