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Corporate Governance through the Proxy Contest: Evidence and Implications

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  • Ikenberry, David
  • Lakonishok, Josef

Abstract

The current literature concerning proxy contests provides little evidence that shareholders suffer materially from sub par performance prior to a contest. Furthermore, no study has thoroughly examined the long-term performance of targeted firms subsequent to a proxy contest. Using a sample of ninety-seven election contests during the period 1968-87, the authors find negative abnormal returns and deteriorating operating performance prior to the announcement of a contest. Following the contest, negative abnormal returns are observed. These negative returns are driven by cases in which dissident shareholders successfully acquire board seats. The results for accounting-based operating performance measures confirm these findings. Copyright 1993 by University of Chicago Press.

Suggested Citation

  • Ikenberry, David & Lakonishok, Josef, 1993. "Corporate Governance through the Proxy Contest: Evidence and Implications," The Journal of Business, University of Chicago Press, vol. 66(3), pages 405-435, July.
    • Handle: RePEc:ucp:jnlbus:v:66:y:1993:i:3:p:405-35
    DOI: 10.1086/296610
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