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Shareholder influence over director nomination via proxy access: Implications for agency conflict and stakeholder value
Author(s) -
Campbell Joanna Tochman,
Campbell T. Colin,
Sirmon David G.,
Bierman Leonard,
Tuggle Christopher S.
Publication year - 2012
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.1989
Subject(s) - nomination , corporate governance , shareholder , stakeholder , accounting , proxy (statistics) , business , agency (philosophy) , corporate law , shareholder value , agency cost , enterprise value , independence (probability theory) , value (mathematics) , economics , finance , management , law , political science , sociology , statistics , mathematics , machine learning , computer science , social science
Corporate governance research indicates that corporate boards of directors may be overly beholden to management, which can be detrimental to firm value creation. Drawing upon agency theory and the governance law literature, we examine the effects of a new SEC rule designed to lessen managerial power by increasing large, long‐term shareholders' influence in the director nomination process. We predict and find support for a positive overall market reaction to the rule's announcement as well as a greater reaction for firms with characteristics that suggest compromised board independence or greater CEO control. Moreover, we examine the implications of greater shareholder voice for another key stakeholder group, firm bondholders, and find evidence that it is also value increasing. We conclude by discussing important implications for theory and practice. Copyright © 2012 John Wiley & Sons, Ltd.