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Proxy Issue Proposals: Impact of the 1992 Proxy SEC Proxy Reforms

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Author Info
Stephen Choi (School of Law, Boalt Hall, UC Berkeley)
Abstract

This article assesses the impact of the 1992 SEC reforms that enhanced the ability of shareholders to communicate during a proxy contest. Utilizing a sample of 361 share-holder-sponsored corporate governance issue proposals from 1991 to 1995, the article finds that the mean percentage of total outstanding votes cast in favor of an issue proposal declined significantly post-reform. As explanation, the article furnishes evidence that certain sponsors interested in their own private agenda rather than general shareholder welfare exploited more fully the proxy mechanism post-reform; controlling for the com-position of sponsors, the proxy reforms generated no significant change in the for-vote outcome of issue proposals. The article concludes instead that the reforms resulted in a shift in the composition of issue proposals targets toward companies relatively less vul-nerable to such proposals pre-reform.

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Paper provided by Berkeley Olin Program in Law & Economics in its series Berkeley Olin Program in Law & Economics, Working Paper Series with number 1005.

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Date of creation: 01 Jan 2000
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Handle: RePEc:cdl:oplwec:1005

Note: oai:cdlib1:blewp-1005
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. DeAngelo, Harry & DeAngelo, Linda, 1989. "Proxy contests and the governance of publicly held corporations," Journal of Financial Economics, Elsevier, vol. 23(1), pages 29-59, June. [Downloadable!] (restricted)
  2. Wahal, Sunil, 1996. "Pension Fund Activism and Firm Performance," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 31(01), pages 1-23, March. [Downloadable!]
  3. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January. [Downloadable!] (restricted)
  4. Weisbach, Michael S., 1988. "Outside directors and CEO turnover," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 431-460, January. [Downloadable!] (restricted)
  5. Rosenstein, Stuart & Wyatt, Jeffrey G., 1990. "Outside directors, board independence, and shareholder wealth," Journal of Financial Economics, Elsevier, vol. 26(2), pages 175-191, August. [Downloadable!] (restricted)
  6. Lupia, Arthur & McCubbins, Mathew D, 1994. "Learning from Oversight: Fire Alarms and Police Patrols Reconstructed," Journal of Law, Economics and Organization, Oxford University Press, vol. 10(1), pages 96-125, April.
  7. Strickland, Deon & Wiles, Kenneth W. & Zenner, Marc, 1996. "A requiem for the USA Is small shareholder monitoring effective?," Journal of Financial Economics, Elsevier, vol. 40(2), pages 319-338, February. [Downloadable!] (restricted)
  8. Benjamin E. Hermalin & Michael S. Weisbach, 1991. "The Effects of Board Composition and Direct Incentives on Firm Performance," Financial Management, Financial Management Association, vol. 20(4), Winter.
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  9. Gordon, Lilli A & Pound, John, 1993. " Information, Ownership Structure, and Shareholder Voting: Evidence from Shareholder-Sponsored Corporate Governance Proposals," Journal of Finance, American Finance Association, vol. 48(2), pages 697-718, June. [Downloadable!] (restricted)
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  1. Johnson, Marilyn F. & Nelson, Karen K. & Shackell, Margaret B., 2001. "An Empirical Analysis of the SEC's 1992 Proxy Reforms on Executive Compensation," Research Papers 1679, Stanford University, Graduate School of Business. [Downloadable!]
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