TY - JOUR
T1 - Managerial Response to Shareholder Empowerment
T2 - Evidence from Majority-voting Legislation Changes
AU - Cuñat, Vicente
AU - Lü, Yiqing
AU - Wu, Hong
PY - 2025/3/18
Y1 - 2025/3/18
N2 - 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.
AB - 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.
KW - Corporate Governance
KW - Majority Voting
KW - Shareholder Activism
KW - Shareholder Empowerment
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UR - https://www.scopus.com/record/pubmetrics.uri?eid=2-s2.0-105000514672&origin=recordpage
U2 - 10.1017/S0022109025000146
DO - 10.1017/S0022109025000146
M3 - RGC 21 - Publication in refereed journal
SN - 0022-1090
JO - Journal of Financial and Quantitative Analysis
JF - Journal of Financial and Quantitative Analysis
ER -