How Management Manipulates Voting on Its Own Proposals

Shareholders can generally affect the decisions of companies in two ways: through voice (voting) and through exit (selling their shares). In a new paper, “Management (of) proposals,” we use shareholder voting records on management proposals from 2003 to 2015 to evaluate the effectiveness of voice as a governance mechanism. We analyze whether management opportunistically brings up more proposals in good times and whether it systematically games the voting process to achieve a favorable outcome.

We find first that managers opportunistically choose to hold shareholder votes following good firm performance. We examine this further in the context of the … Read more