Corporate governance proposals and shareholder activism: the role of institutional investors

We study shareholder proposals across a period of substantial activity and find systematic differences both across sponsor identity and across time. To measure the success of shareholder activism, we examine voting outcomes and short-term market reactions conditioned on proposal type and sponsor ide...

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Bibliographic Details
Published in:Journal of financial economics 2000-08, Vol.57 (2), p.275-305
Main Authors: Gillan, Stuart L., Starks, Laura T.
Format: Article
Language:English
Subjects:
Activism
Corporate governance
Financial economics
Institutional activism
Institutional investments
Institutionalism
Investors
Management techniques
Proposals
Securities markets
Shareholder activism
Shareholder voting
Stockholders
Studies
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Summary:We study shareholder proposals across a period of substantial activity and find systematic differences both across sponsor identity and across time. To measure the success of shareholder activism, we examine voting outcomes and short-term market reactions conditioned on proposal type and sponsor identity. The voting analysis documents that sponsor identity, issue type, prior performance and time period are important influences on the voting outcome. Proposals sponsored by institutions or coordinated groups appear to act as substitutes gaining substantially more support than proposals sponsored by individuals. The nature of the stock market reaction, while typically small, varies according to the issue and the sponsor identity.
ISSN:0304-405X
1879-2774
DOI:10.1016/S0304-405X(00)00058-1