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Proxy Issue Proposals: Impact of the 1992 SEC Proxy Reforms

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  • Choi, Stephen

Abstract

This article assesses the impact of the 1992 SEC reforms that enhanced the ability of shareholders to communicate during a proxy contest. Utilizing a sample of 361 shareholder-sponsored corporate governance issue proposals from 1991 to 1995, the article finds that the mean percentage of total outstanding votes cast in favor of an issue proposal declined significantly postreform. As explanation the article furnishes evidence that certain sponsors interested in their own private agenda rather than general shareholder welfare exploited more fully the proxy mechanism postreform; controlling for the composition of sponsors, the proxy reforms generated no significant change in the for-vote outcome of issue proposals. The article concludes instead that the reforms resulted in a shift in the composition of issue proposal targets toward companies relatively less vulnerable to such proposals prereform. Copyright 2000 by Oxford University Press.

Suggested Citation

  • Choi, Stephen, 2000. "Proxy Issue Proposals: Impact of the 1992 SEC Proxy Reforms," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 16(1), pages 233-268, April.
  • Handle: RePEc:oup:jleorg:v:16:y:2000:i:1:p:233-68
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    Cited by:

    1. Renneboog, Luc & Szilagyi, Peter G., 2011. "The role of shareholder proposals in corporate governance," Journal of Corporate Finance, Elsevier, vol. 17(1), pages 167-188, February.
    2. Renneboog, L.D.R. & Szilagyi, P.G., 2009. "Shareholder Activism through the Proxy Process," Other publications TiSEM cc25d736-2965-4511-b100-1, Tilburg University, School of Economics and Management.
    3. Becht, Marco & Bolton, Patrick & Roell, Ailsa, 2003. "Corporate governance and control," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 1, pages 1-109, Elsevier.
    4. Johnson, Marilyn F. & Nelson, Karen K. & Shackell, Margaret B., 2001. "An Empirical Analysis of the SEC's 1992 Proxy Reforms on Executive Compensation," Research Papers 1679, Stanford University, Graduate School of Business.
    5. Dasgupta, Amil & Fos, Vyacheslav & Sautner, Zacharias, 2021. "Institutional investors and corporate governance," LSE Research Online Documents on Economics 112114, London School of Economics and Political Science, LSE Library.
    6. Huang, Xiaoran & Kang, Jun-Koo, 2017. "Geographic concentration of institutions, corporate governance, and firm value," Journal of Corporate Finance, Elsevier, vol. 47(C), pages 191-218.
    7. Denes, Matthew R. & Karpoff, Jonathan M. & McWilliams, Victoria B., 2017. "Thirty years of shareholder activism: A survey of empirical research," Journal of Corporate Finance, Elsevier, vol. 44(C), pages 405-424.
    8. Bradley, Michael & Brav, Alon & Goldstein, Itay & Jiang, Wei, 2010. "Activist arbitrage: A study of open-ending attempts of closed-end funds," Journal of Financial Economics, Elsevier, vol. 95(1), pages 1-19, January.
    9. Jackson, Gregory, 2010. "Understanding corporate governance in the United States: An historical and theoretical reassessment," Arbeitspapiere 223, Hans-Böckler-Stiftung, Düsseldorf.
    10. Szilagyi, P.G., 2007. "Corporate governance and the agency costs of debt and outside equity," Other publications TiSEM 9520d40a-224f-43a8-9bf9-b, Tilburg University, School of Economics and Management.

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