The Effect of Shareholder Turnout on Voting Rights and Separation

Abstract

We find that shareholder turnout at the general meeting of Norwegian public firms varies between 11% and 95%, being 59% on average. This turnout behavior implies that majority control requires less than one third of the average firm’s shares, and that attending shareholders vote for 1.7 times the shares they own. Turnout is higher when the largest shareholder is foreign, the firm is small, the debt is low, and option compensation is on the agenda. This evidence suggests that shareholders consider the general meeting a more important monitoring device the more serious the potential conflicts of interest in the firm.

Keywords: voting, general meeting, shareholder turnout, voter presence, voting rights, cash flow rights, control rights, separation

JEL Classification: G32, G34