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The elimination of broker voting in director elections

Author

Listed:
  • Akyol, Ali C.
  • Raff, Konrad
  • Verwijmeren, Patrick

Abstract

In 2009, the Securities and Exchange Commission (SEC) reformed shareholder voting by eliminating uninstructed broker voting in director elections. We use this reform as a quasi-natural experiment to assess the value of shareholder empowerment. Using different control groups and various cross-sectional tests, we find that the reform did not increase average equity values.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:finlet:v:21:y:2017:i:c:p:34-39
    DOI: 10.1016/j.frl.2017.02.001
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    References listed on IDEAS

    as
    1. Jonathan B. Cohn & Stuart L. Gillan & Jay C. Hartzell, 2016. "On Enhancing Shareholder Control: A (Dodd-) Frank Assessment of Proxy Access," Journal of Finance, American Finance Association, vol. 71(4), pages 1623-1668, August.
    2. Giroud, Xavier & Mueller, Holger M., 2010. "Does corporate governance matter in competitive industries?," Journal of Financial Economics, Elsevier, vol. 95(3), pages 312-331, March.
    3. Lucian Bebchuk & Alma Cohen & Allen Ferrell, 2009. "What Matters in Corporate Governance?," Review of Financial Studies, Society for Financial Studies, vol. 22(2), pages 783-827, February.
    4. Larcker, David F. & Ormazabal, Gaizka & Taylor, Daniel J., 2011. "The market reaction to corporate governance regulation," Journal of Financial Economics, Elsevier, vol. 101(2), pages 431-448, August.
    5. 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(05), pages 1029-1057, October.
    6. Bo Becker & Daniel Bergstresser & Guhan Subramanian, 2013. "Does Shareholder Proxy Access Improve Firm Value? Evidence from the Business Roundtable's Challenge," Journal of Law and Economics, University of Chicago Press, vol. 56(1), pages 127-160.
    7. David Yermack, 2010. "Shareholder Voting and Corporate Governance," Annual Review of Financial Economics, Annual Reviews, vol. 2(1), pages 103-125, December.
    8. Jennifer E. Bethel & Stuart L. Gillan, 2002. "The Impact of the Institutional and Regulatory Environment on Shareholder Voting," Financial Management, Financial Management Association, vol. 31(4), Winter.
    9. Zhang, Ivy Xiying, 2007. "Economic consequences of the Sarbanes-Oxley Act of 2002," Journal of Accounting and Economics, Elsevier, vol. 44(1-2), pages 74-115, September.
    10. repec:bla:joares:v:24:y:1986:i:2:p:316-334 is not listed on IDEAS
    11. repec:bla:joares:v:21:y:1983:i:1:p:184-221 is not listed on IDEAS
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    More about this item

    Keywords

    Shareholder voting; Director elections; Securities and Exchange Commission; Board effectiveness;

    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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