Interim News and the Role of Proxy Voting Advice
Review of Financial Studies, Vol. 23, No. 12, 2010
36 Pages Posted: 27 Sep 2010 Last revised: 30 Dec 2010
Date Written: September 20, 2010
Abstract
This paper examines the information content and consequences of third-party voting advice that arrives as news at an interim stage in corporate proxy contests. We first document significant stock returns around announcements of proxy vote recommendations. We then develop a multiequation empirical procedure for disentangling the price impact of prediction effects (changes in contest outcome probabilities) from the price impact of certification effects (changes in outcome-contingent valuations). Both effects are present in the data: Voting advice is both predictive about contest outcomes and informative about the ability of dissidents to add value. Consequently, proxy advice plays a dual informational role.
Keywords: Corporate Governance, Shareholder Voting, Proxy Contests, Proxy Advice
JEL Classification: G20, G24, G30, G34
Suggested Citation: Suggested Citation
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