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Do Shareholders Vote Strategically? Voting Behavior, Proposal Screening, and Majority Rules

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  • Ernst Maug
  • Kristian Rydqvist

Abstract

We analyze how shareholders screen management proposals at annual general meetings. First, we use a simple model of strategic voting to develop a theoretical benchmark of effective information aggregation through voting. Then, we derive testable implications and provide structural estimates of the model parameters. The main conclusions are that shareholders vote strategically and that proposal screening increases value. Shareholders largely neutralize the lock-in effect of supermajority rules, thereby preventing the incorrect rejection of proposals. Copyright 2009, Oxford University Press.

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  • Ernst Maug & Kristian Rydqvist, 2009. "Do Shareholders Vote Strategically? Voting Behavior, Proposal Screening, and Majority Rules," Review of Finance, European Finance Association, vol. 13(1), pages 47-79.
  • Handle: RePEc:oup:revfin:v:13:y:2009:i:1:p:47-79
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    File URL: http://hdl.handle.net/10.1093/rof/rfn026
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