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What Are the Firm Value Implications of SEC-Challenged Shareholder Proposals?

Author

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  • Maxime Couvert

    (Faculty of Business and Economics, The University of Hong Kong, Pokfulam, Hong Kong; and HKU Jockey Club Enterprise Sustainability Global Research Institute, Pokfulam, Hong Kong)

Abstract

The Securities and Exchange Commission (SEC) permits managers to request the exclusion of shareholder-initiated proposals. I construct a novel data set of excluded and withdrawn proposals from the SEC’s responses to managers’ requests. An examination of announcement returns to withdrawal and exclusion decisions demonstrates that SEC-challenged proposals are value destroying. I find that special interest investors pursuing self-serving agendas and retail investors advocating for one-size-fits-all reforms explain the value-destroying nature of SEC-challenged proposals. On average, the SEC challenge benefits firm value by filtering out these harmful proposals. However, a regression discontinuity design reveals that proposals the SEC refuses to exclude may receive majority shareholder support and destroy firm value.

Suggested Citation

  • Maxime Couvert, 2025. "What Are the Firm Value Implications of SEC-Challenged Shareholder Proposals?," Management Science, INFORMS, vol. 71(6), pages 4728-4756, June.
    • Handle: RePEc:inm:ormnsc:v:71:y:2025:i:6:p:4728-4756
    DOI: 10.1287/mnsc.2022.01344
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