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Mandatory Voting, Large Shareholder Power, and Wolf Packs

Author

Listed:
  • Patricia Charléty
  • Marie-Cécile Fagart
  • Saïd Souam

Abstract

Our model develops a theory of how systematic voters (e.g., institutional shareholders) who always vote, in addition to partisans who vote strategically, affect the outcome of general meetings. Depending on the shareholder structure, we show that systematic voting has two opposite consequences for meeting outcomes: it reinforces the power of the largest group of systematic voters, and less expectedly, it also creates an incentive for partisans to vote to oppose together this largest group. We apply our results to different ownership structures. In particular, we emphasize the importance, for the board, of having the support of the largest partisan and the role of proxy advisors and examine the conditions under which blockholders can successfully oppose the largest group of systematic voters either alone or together (wolf pack) 1 .

Suggested Citation

  • Patricia Charléty & Marie-Cécile Fagart & Saïd Souam, 2019. "Mandatory Voting, Large Shareholder Power, and Wolf Packs," Finance, Presses universitaires de Grenoble, vol. 40(2), pages 51-76.
    • Handle: RePEc:cai:finpug:fina_402_0051
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    Cited by:

    1. Rezvan Pourmansouri & Amir Mehdiabadi & Vahid Shahabi & Cristi Spulbar & Ramona Birau, 2022. "An Investigation of the Link between Major Shareholders’ Behavior and Corporate Governance Performance before and after the COVID-19 Pandemic: A Case Study of the Companies Listed on the Iranian Stock," JRFM, MDPI, vol. 15(5), pages 1-30, April.

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