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Governance Changes through Shareholder Initiatives: The Case of Proxy Access

Published online by Cambridge University Press:  30 June 2020

Tara Bhandari Open the ORCID record for Tara Bhandari [Opens in a new window] ,
Peter Iliev  and
Jonathan Kalodimos
Tara Bhandari*
Affiliation:
U.S. Securities and Exchange Commission bhandarit@sec.gov
Peter Iliev
Affiliation:
Pennsylvania State University Smeal College of Businesspgi1@psu.edu
Jonathan Kalodimos
Affiliation:
Oregon State University College of Businessjonathan.kalodimos@oregonstate.edu
*
bhandarit@sec.gov (corresponding author)
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Abstract

We study a regulatory change that led to over 300 shareholder proposals to instate proxy access and more than 250 firms adopting proxy access from 2012 to 2016. The firms expected to benefit most from proxy access have the most positive market reaction to receiving a proposal, but adoptions are not concentrated at these firms. We find that proposing and voting shareholders do not discriminate between firms that would or would not benefit and that management resists proxy access at the firms that stand to benefit most. This process results in the concentration of adoptions at large, already-well-governed firms.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 56 , Issue 5 , August 2021 , pp. 1590 - 1621
Copyright
© The Author(s), 2020. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

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Footnotes

The U.S. Securities and Exchange Commission (SEC), as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. The views expressed herein are those of the authors and do not necessarily reflect the views of the SEC or of the authors’ colleagues on the staff of the SEC. We greatly appreciate the valuable feedback received from Daniel Bergstresser, Jay Cai (the referee), Jonathan Cohn, Peter Cziraki, Matthew Denes, Craig Doidge, Alexander Dyck, Laura Fields, Stuart Gillan, Matthew Gustafson, John Hackney, Michelle Lowry, Nadya Malenko, Chester Spatt, Laura Starks, Ralph Walkling, Michael Weisbach, and Tracie Woidtke; participants at the 2017 Western Finance Association Conference, the 2016 Society for Financial Studies (SFS) Finance Cavalcade, and the 2016 Drexel Corporate Governance Conference; and participants in seminars at Oregon State University, Pennsylvania State University, the University of Delaware, the University of Georgia, the University of Nebraska–Lincoln, the University of Oregon, the University of Tennessee Neel Corporate Governance Center, the University of Texas at Austin, and the SEC.

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