De facto voting power and the value of voting rights

Vikas Agarwal, Oğuzhan Karakaş, Peter Limbach and Honglin Ren

No 26-07, CFR Working Papers from University of Cologne, Centre for Financial Research (CFR)

Abstract: We document high persistence in shareholder turnout, creating predictable differences in effective voting power across firms. Accordingly, firms with lower turnout exhibit higher voting premia. For identification, we exploit the 2010 NYSE Rule 452 amendment eliminating broker authority over uninstructed shares as a shock to turnout in director elections. Further, we show that low turnout predicts contentious governance events where shareholder influence is more valuable, and that the negative voting premium-turnout relation is stronger when such events are more likely. Results indicate that investors price de facto voting power and that persistent shareholder participation shape the value of corporate control.

Keywords: Shareholder voting participation; Value of voting rights; Broker non-vote rule; Contentious governance events; Voting power (search for similar items in EconPapers)
JEL-codes: G11 G23 G41 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-cdm and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfrwps:344100

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