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The Elimination of Broker Voting in Director Elections

Author

Listed:
  • Ali Akyol

    (University of Melbourne)

  • Konrad Raff

    (VU University Amsterdam)

  • Patrick Verwijmeren

    (VU University Amsterdam, Duisenberg school of finance, and University of Glasgow)

Abstract

After pressure from shareholder activists, proxy advisory firms, and the New York Stock Exchange, the Securities and Exchange Commission has eliminated uninstructed broker voting in director elections. We observe that average director approval rates remain high after the change in regulation, while the probability of a director being voted off the board remains low. In addition, we find no evidence of significant wealth effects of the change in regulation. We do find that firms are increasingly letting shareholders ratify their auditors after the change in regulation, which helps in establishing a quorum.

Suggested Citation

  • Ali Akyol & Konrad Raff & Patrick Verwijmeren, 2012. "The Elimination of Broker Voting in Director Elections," Tinbergen Institute Discussion Papers 12-094/IV/DSF38, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20120094
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    References listed on IDEAS

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    More about this item

    Keywords

    Broker voting; shareholder empowerment; Securities and Exchange Commission; board effectiveness;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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