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Shareholders in the Boardroom: Wealth Effects of the SEC’s Proposal to Facilitate Director Nominations

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  • Akyol, Ali C.
  • Lim, Wei Fen
  • Verwijmeren, Patrick

Abstract

Current attempts to reform financial markets presume that shareholder empowerment benefits shareholders. We investigate the wealth effects associated with the Securities and Exchange Commission’s rule to facilitate director nominations by shareholders. Our results are not in line with shareholder empowerment creating value: The average daily abnormal returns surrounding events that increase (decrease) the probability of the proposal’s passage are significantly negative (positive). Furthermore, given an increase in the probability of the proposal’s passage, firms whose shareholders are more likely to use the rule to nominate directors experience more negative abnormal returns.

Suggested Citation

  • Akyol, Ali C. & Lim, Wei Fen & Verwijmeren, Patrick, 2012. "Shareholders in the Boardroom: Wealth Effects of the SEC’s Proposal to Facilitate Director Nominations," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 47(5), pages 1029-1057, October.
    • Handle: RePEc:cup:jfinqa:v:47:y:2012:i:05:p:1029-1057_00
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    Citations

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    Cited by:

    1. Donaldson, Jason & Piacentino, Giorgia & Malenko, Nadya, 2017. "Deadlock on the Board," CEPR Discussion Papers 12503, C.E.P.R. Discussion Papers.
    2. Akyol, Ali C. & Raff, Konrad & Verwijmeren, Patrick, 2017. "The elimination of broker voting in director elections," Finance Research Letters, Elsevier, vol. 21(C), pages 34-39.
    3. Denes, Matthew R. & Karpoff, Jonathan M. & McWilliams, Victoria B., 2017. "Thirty years of shareholder activism: A survey of empirical research," Journal of Corporate Finance, Elsevier, vol. 44(C), pages 405-424.
    4. Moses, Olayinka & Houqe, Muhammad Nurul & van Zijl, Tony, 2018. "What is the economic value of the Extractive Industries Transparency Initiative (EITI) information disclosure?," Journal of Contemporary Accounting and Economics, Elsevier, vol. 14(2), pages 216-233.
    5. Paul Cousins & Marie Dutordoir & Benn Lawson & João Quariguasi Frota Neto, 2020. "Shareholder Wealth Effects of Modern Slavery Regulation," Management Science, INFORMS, vol. 66(11), pages 5265-5289, November.
    6. 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.
    7. Wilson, Jared I., 2020. "The consequences of limiting shareholder litigation: Evidence from exclusive forum provisions," Journal of Corporate Finance, Elsevier, vol. 64(C).
    8. Matsusaka, John G. & Ozbas, Oguzhan & Yi, Irene, 2017. "Why Do Managers Fight Shareholder Proposals? Evidence from SEC No-Action Letter Decisions," Working Papers 262, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.

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