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Voting against absent directors

Author

Listed:
  • Sylvain Bourjade

    (University of Toulouse, Toulouse Business School)

  • Crina Pungulescu

    (Institute for Economic Forecasting, National Institute of Economic Research and Romanian Academy)

  • David Stolin

    (University of Toulouse, Toulouse Business School)

Abstract

Director elections are a key corporate governance mechanism, and attendance of board meetings is typically the only observable measure of individual director effort. However, little is known is about shareholder voting response to director absences. Using data on large UK public companies, we report that shareholder opposition to directors is 1) highly convex in the proportion of meetings they missed in the preceding fiscal year, and 2) unaffected by director absences in the fiscal year before, in spite of 3) absenteeism being persistent from one year to the next. We raise questions about the optimality of investor decision-making in the proxy voting process and draw parallels to the literature on investor reaction to fund performance.

Suggested Citation

  • Sylvain Bourjade & Crina Pungulescu & David Stolin, 2016. "Voting against absent directors," Economics Bulletin, AccessEcon, vol. 36(2), pages 901-912.
    • Handle: RePEc:ebl:ecbull:eb-15-00781
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2016/Volume36/EB-16-V36-I2-P88.pdf
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    References listed on IDEAS

    as
    1. Lu Zheng, 1999. "Is Money Smart? A Study of Mutual Fund Investors' Fund Selection Ability," Journal of Finance, American Finance Association, vol. 54(3), pages 901-933, June.
    2. repec:bla:jfinan:v:53:y:1998:i:5:p:1589-1622 is not listed on IDEAS
    3. Jie Cai & Jacqueline L. Garner & Ralph A. Walkling, 2009. "Electing Directors," Journal of Finance, American Finance Association, vol. 64(5), pages 2389-2421, October.
    4. Spiegel, Matthew & Zhang, Hong, 2013. "Mutual fund risk and market share-adjusted fund flows," Journal of Financial Economics, Elsevier, vol. 108(2), pages 506-528.
    5. Guercio, Diane Del & Tkac, Paula A., 2002. "The Determinants of the Flow of Funds of Managed Portfolios: Mutual Funds vs. Pension Funds," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 37(4), pages 523-557, December.
    6. Aneel Keswani & David Stolin, 2006. "Mutual Fund Performance Persistence And Competition: A Cross‐Sector Analysis," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 29(3), pages 349-366, September.
    7. Carhart, Mark M, 1997. "On Persistence in Mutual Fund Performance," Journal of Finance, American Finance Association, vol. 52(1), pages 57-82, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    corporate governance; board meeting attendance; director re-election; proxy voting;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G2 - Financial Economics - - Financial Institutions and Services

    Statistics

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