Managerial Response to Shareholder Empowerment: Evidence from Majority-voting Legislation Changes

Vicente Cuñat, Yiqing Lü, Hong Wu

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review

Abstract

We study how managers react to shareholder empowerment that makes votes on shareholder proposals binding. We empirically exploit staggered legislative changes that introduce such empowerment for proposals regarding majority voting in director elections. We find that managers become more responsive to shareholder requirements by initiating majority voting through either management proposals or governance guidelines. This early action crowds out shareholder proposals. Further results suggest compromised implementation: managers adopt provisions that give them greater control over the channel of implementation and allow them to retain directors who fail in elections. Our results suggest that managers retain substantial discretion to modulate shareholder requirements. © The Author(s), 2025.
Original languageEnglish
JournalJournal of Financial and Quantitative Analysis
DOIs
Publication statusOnline published - 18 Mar 2025
Externally publishedYes

Research Keywords

  • Corporate Governance
  • Majority Voting
  • Shareholder Activism
  • Shareholder Empowerment

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