Is Shareholder Voting an Effective Corporate Governance Tool?

Proponents of shareholder voting argue that restricting it would reduce the ability of shareholders to hold management accountable. The implication of this argument is that mandating equal voting rights for all shares will benefit shareholders. However, the evidence as to the effectiveness of shareholder proxy voting is inconclusive (see, e.g., Ertimur et al. (2011), Armstrong et al. (2013), and Larcker et al. (2015), among others). One of the limitations of prior studies that examine the efficacy of shareholder voting is that the optimal voting decision for a given proxy item is often unclear. For example, one major proxy voting issue … Read more