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The wealth effects of shareholder‐sponsored proposals
Author(s) -
Forjan James M.
Publication year - 1999
Publication title -
review of financial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.347
H-Index - 41
eISSN - 1873-5924
pISSN - 1058-3300
DOI - 10.1016/s1058-3300(99)00003-8
Subject(s) - shareholder , corporate governance , negotiation , shareholder loan , settlement (finance) , business , accounting , sample (material) , shareholder value , value (mathematics) , monetary economics , economics , finance , law , political science , chemistry , non conforming loan , loan , chromatography , machine learning , non performing loan , computer science , payment
Shareholder‐sponsored proposals represent direct attempts to improve the operating and governance performance of publicly held corporations. This study examines the different types of shareholder proposals to determine their impact on value. While some recent studies show positive wealth effects for small or specific samples associated with shareholder proposal announcements or no wealth effects at all, this study documents significant negative abnormal returns for a large sample of firms. The results of previous studies suggest that shareholder proposals are beneficial to shareholders, and this study shows that to be true for only a fraction of them. Although management opposes the overwhelming majority of shareholder proposals, there are rare instances in which they either support the proposal and negotiate a settlement or in which the proposal receives enough support at the annual meeting to pass. This study documents positive abnormal returns for these cases.