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Managerial response to shareholder empowerment: evidence from majority-voting legislation changes

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  • Cuñat, Vicente
  • Lu, Yiqing
  • Wu, Hong

Abstract

This paper studies how managers react to shareholder empowerment that makes the votes on shareholder proposals regarding majority-voting director elections binding. Exploiting staggered legislative changes that introduce such empowerment, we find that managers become more responsive by initiating majority voting through either management proposals or governance guidelines. Further results suggest compromised implementation: managers adopt provisions that give them greater control over the channel of implementation and allow them to retain directors who fail in elections. Managers show the greatest resistance to implementing majority-voting standards when shareholder value is likely to suffer more or benefit less from the legislation.
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Suggested Citation

  • Cuñat, Vicente & Lu, Yiqing & Wu, Hong, 2023. "Managerial response to shareholder empowerment: evidence from majority-voting legislation changes," LSE Research Online Documents on Economics 120742, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:120742
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    corporate governance; majority voting; shareholder activisim; shareholder empowerment;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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