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Manchester Grand Hyatt, Harbor A
American Finance Association
Friday, Jan. 3, 2020 10:15 AM - 12:15 PM (PDT)
- Chair: Doron Levit, University of Pennsylvania
Managerial Response Under Shareholder Empowerment: Evidence from Majority Voting Legislation Changes
AbstractThis paper studies how managers react to shareholder empowerment vis-à-vis governance provisions. We show that a staggered legislative change that increases noncompliance costs in the implementation of shareholder-initiated majority voting proposals is followed by an increase in its implementation via management initiatives. Management adopts provisions that crowd out shareholder-initiated proposals, pre-empt shareholder-initiated changes and give management control over future voting standard amendments. The remaining firms experience a more negative market return reaction in response to close-call votes on shareholder-initiated proposals. The results jointly indicate that managers seek to preserve shareholder-value by moderating the implementation of majority voting standards.
Phantom of the Opera: ETF Shorting and Shareholder Voting
AbstractThe short-selling of exchange-traded funds (ETFs) creates “phantom” ETF shares, trading at ETF market prices, with cash flows rights but no associated voting rights. Unlike regular ETF shares backed by the underlying securities of the ETF and voted as directed by the sponsor, phantom ETF shares are backed by collateral that is not voted. Introducing a novel measure of phantom shares both of the ETF and corresponding underlying securities, we find that increases in phantom shares are associated with decreases in number of proxy votes cast (for and against), and increases in broker non-votes, the vote premium, and value-reducing acquisitions.
University of Southern California
University of North Carolina-Chapel Hill
- G3 - Corporate Finance and Governance