Board of directors' responsiveness to shareholders: Evidence from shareholder proposals

Yonca Ertimur, Fabrizio Ferri, Stephen R. Stubben

Research output: Contribution to journalArticle

114 Citations (Scopus)

Abstract

In recent years boards have become significantly more likely to implement non-binding, majority-vote (MV) shareholder proposals. Using a sample of 620 MV proposals between 1997 and 2004, we find that shareholder pressure (e.g., the voting outcome and the influence of the proponent) and the type of proposals are the main determinants of the implementation decision, while traditional governance indicators do not seem to affect the decision. We then examine the labor market consequences of the implementation decision for outside directors and find that directors implementing MV shareholder proposals experience a one-fifth reduction in the likelihood of losing their board seat as well as other directorships.

Original languageEnglish (US)
Pages (from-to)53-72
Number of pages20
JournalJournal of Corporate Finance
Volume16
Issue number1
DOIs
StatePublished - Feb 1 2010
Externally publishedYes

Fingerprint

Board of directors
Responsiveness
Shareholders
Vote
Voting
Governance
Labour market
Seat
Outside directors

Keywords

  • Corporate governance
  • Director turnover
  • Shareholder proposals

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management

Cite this

Board of directors' responsiveness to shareholders : Evidence from shareholder proposals. / Ertimur, Yonca; Ferri, Fabrizio; Stubben, Stephen R.

In: Journal of Corporate Finance, Vol. 16, No. 1, 01.02.2010, p. 53-72.

Research output: Contribution to journalArticle

@article{c68d84249297418cbef431adc22f115c,
title = "Board of directors' responsiveness to shareholders: Evidence from shareholder proposals",
abstract = "In recent years boards have become significantly more likely to implement non-binding, majority-vote (MV) shareholder proposals. Using a sample of 620 MV proposals between 1997 and 2004, we find that shareholder pressure (e.g., the voting outcome and the influence of the proponent) and the type of proposals are the main determinants of the implementation decision, while traditional governance indicators do not seem to affect the decision. We then examine the labor market consequences of the implementation decision for outside directors and find that directors implementing MV shareholder proposals experience a one-fifth reduction in the likelihood of losing their board seat as well as other directorships.",
keywords = "Corporate governance, Director turnover, Shareholder proposals",
author = "Yonca Ertimur and Fabrizio Ferri and Stubben, {Stephen R.}",
year = "2010",
month = "2",
day = "1",
doi = "10.1016/j.jcorpfin.2009.07.005",
language = "English (US)",
volume = "16",
pages = "53--72",
journal = "Journal of Corporate Finance",
issn = "0929-1199",
publisher = "Elsevier",
number = "1",

}

TY - JOUR

T1 - Board of directors' responsiveness to shareholders

T2 - Evidence from shareholder proposals

AU - Ertimur, Yonca

AU - Ferri, Fabrizio

AU - Stubben, Stephen R.

PY - 2010/2/1

Y1 - 2010/2/1

N2 - In recent years boards have become significantly more likely to implement non-binding, majority-vote (MV) shareholder proposals. Using a sample of 620 MV proposals between 1997 and 2004, we find that shareholder pressure (e.g., the voting outcome and the influence of the proponent) and the type of proposals are the main determinants of the implementation decision, while traditional governance indicators do not seem to affect the decision. We then examine the labor market consequences of the implementation decision for outside directors and find that directors implementing MV shareholder proposals experience a one-fifth reduction in the likelihood of losing their board seat as well as other directorships.

AB - In recent years boards have become significantly more likely to implement non-binding, majority-vote (MV) shareholder proposals. Using a sample of 620 MV proposals between 1997 and 2004, we find that shareholder pressure (e.g., the voting outcome and the influence of the proponent) and the type of proposals are the main determinants of the implementation decision, while traditional governance indicators do not seem to affect the decision. We then examine the labor market consequences of the implementation decision for outside directors and find that directors implementing MV shareholder proposals experience a one-fifth reduction in the likelihood of losing their board seat as well as other directorships.

KW - Corporate governance

KW - Director turnover

KW - Shareholder proposals

UR - http://www.scopus.com/inward/record.url?scp=71349086945&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=71349086945&partnerID=8YFLogxK

U2 - 10.1016/j.jcorpfin.2009.07.005

DO - 10.1016/j.jcorpfin.2009.07.005

M3 - Article

AN - SCOPUS:71349086945

VL - 16

SP - 53

EP - 72

JO - Journal of Corporate Finance

JF - Journal of Corporate Finance

SN - 0929-1199

IS - 1

ER -