What Are the Shareholder Value Implications of SEC-Challenged Shareholder Proposals?

69 Pages Posted: 30 Dec 2018 Last revised: 3 Nov 2023

Date Written: November 2, 2023

Abstract

The Securities and Exchange Commission (SEC) permits managers to request the exclusion of shareholder-initiated proposals. I construct a novel dataset of excluded and withdrawn proposals from the SEC's responses to managers' requests. An examination of announcement returns to withdrawal and exclusion decisions demonstrates that SEC-challenged proposals are value-destroying. I find that special interest investors pursuing self-serving agendas and retail investors advocating for one-size-fits-all reforms explain the value-destroying nature of SEC-challenged proposals. On average, the SEC challenge benefits firm value by filtering out these harmful proposals. However, a regression discontinuity design reveals that proposals the SEC refuses to exclude may receive majority shareholder support and destroy firm value.

Keywords: Corporate governance, corporate social responsibility, shareholder proposals, shareholder empowerment, SEC

JEL Classification: G23, G32, G34

Suggested Citation

Couvert, Maxime, What Are the Shareholder Value Implications of SEC-Challenged Shareholder Proposals? (November 2, 2023). Swiss Finance Institute Research Paper No. 18-79, Available at SSRN: https://ssrn.com/abstract=3300177 or http://dx.doi.org/10.2139/ssrn.3300177

Maxime Couvert (Contact Author)

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
372
Abstract Views
3,027
Rank
146,656
PlumX Metrics