Show me your hand: An examination of voting methods at annual general meetings

Until 2022 Australian companies' legislation required that resolutions at annual general meetings be decided using a show of hands of those present at the meeting unless the meeting chair called a poll vote. The use of show of hands voting has been criticised as it ignores a shareholder's ownership stake and does not count the votes of shareholders that vote prior to the meeting. Additionally, there is anecdotal evidence that resolutions have been passed by a show of hands when votes cast prior to the meeting suggested that the resolution may have failed. This study investigates the extent of inappropriate passing of meeting resolutions, along with the determinants and consequences of the voting method employed. Consistent with the anecdotal evidence we report that some firms appear to have inappropriately passed resolutions using a show of hands vote. We document firms are more likely to vote by poll when they are larger, have lower stock returns, have greater board gender diversity and lower shareholder concentration. Importantly we find that the method of voting matters to shareholders and that a move away from voting by a show of hands encourages greater shareholder voting participation and dissent at the annual general meeting. Interestingly, firms are more likely to withdraw resolutions with higher dissent prior to the AGM when show of hands voting is discouraged.