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The Role of Advisory Services in Proxy Voting

  • Cindy R. Alexander
  • Mark A. Chen
  • Duane J. Seppi
  • Chester S. Spatt
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    This paper studies the information content and consequences of third-party voting advice issued during proxy contests. We document significant abnormal stock returns around proxy vote recommendations and develop an estimation procedure for disentangling stock price effects due to changes in outcome probabilities from those due to changes in outcome-contingent valuations. We find that voting advice is a good predictor of contest outcomes and that vote recommendations appear to certify the extent to which dissidents can add value. Thus, proxy advice seems to play a dual informational role in financial markets.

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    File URL: http://www.nber.org/papers/w15143.pdf
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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15143.

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    Date of creation: Jul 2009
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    Publication status: published as “Interim News and the Role of Proxy Voting Advice,” December 2010 (with C . Alexander, M . Chen and D . Seppi), Revi ew of Financial Studies , 23, 4419 - 4454.
    Handle: RePEc:nbr:nberwo:15143
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