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Corporate Voting versus Market Price Setting

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  • Yair Listokin

Abstract

This paper examines the relation between two means of corporate information aggregation---corporate voting and stock market pricing. If the median voter and the price-setting shareholder share similar information, then close proxy contest outcomes should not have systematic effects on stock prices. The paper shows, however, that close dissident victories cause positive movements in stock prices, while close management victories lead to negative price effects. The median voter values management control more than the price-setting shareholder. Voting and market pricing aggregate information in very different ways, with important implications for the role of voting and market pricing in corporate law. Copyright 2009, Oxford University Press.

Suggested Citation

  • Yair Listokin, 2009. "Corporate Voting versus Market Price Setting," American Law and Economics Review, American Law and Economics Association, vol. 11(2), pages 608-635.
    • Handle: RePEc:oup:amlawe:v:11:y:2009:i:2:p:608-635
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    File URL: http://hdl.handle.net/10.1093/aler/ahp015
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    Cited by:

    1. Christopher S. Armstrong & Ian D. Gow & David F. Larcker, 2013. "The Efficacy of Shareholder Voting: Evidence from Equity Compensation Plans," Journal of Accounting Research, Wiley Blackwell, vol. 51(5), pages 909-950, December.
    2. Josef Bajzik, 2023. "Does Shareholder Activism Have a Long-Lasting Impact on Company Value? A Meta-Analysis," Working Papers 2023/10, Czech National Bank.
    3. Lingwei Li & Huai Zhang, 2021. "The devil is in the detail? Investors’ mispricing of proxy voting outcomes on M&A deals," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(3-4), pages 692-717, March.
    4. Armstrong, Christopher S. & Gow, Ian D. & Larcker, David F., 2012. "The Efficacy of Shareholder Voting: Evidence from Equity Compensation Plans," Research Papers 2097, Stanford University, Graduate School of Business.
    5. Bajzik, Josef, 2023. "Is the role of shareholder activism in corporate governance overestimated?," Finance Research Letters, Elsevier, vol. 58(PC).

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