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Secrecy, Collusion and Coalition Building in Corporate Governance

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Author Info
Swartz, Lee Mick
Abstract

This paper studies secrecy in voting on corporate governance issues and finds evidence that supports the coalition building hypothesis and, in part, rejects the agency cost hypothesis. The conditions for insiders and large outsiders to form coalitions are examined. The results are consistent with insiders and large outsiders cooperating and voting as a block to maintain power; this imposes costs on other shareholders. Consistent with the agency theory and the coalition building theory, management initiated amendments have a more negative impact that shareholder initiated amendments. No evidence is found to support the vote your conscience theory on secret voting.

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Publisher Info
Paper provided by Purdue University, Department of Economics in its series Purdue University Economics Working Papers with number 1175.

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Length: 43 pages
Date of creation: Apr 2005
Date of revision:
Handle: RePEc:pur:prukra:1175

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