Does the director election system matter? Evidence from majority voting

Yonca Ertimur, Fabrizio Ferri, David Oesch

Research output: Contribution to journalArticlepeer-review

28 Scopus citations


We examine the effect of a change in the director election system—the switch from a plurality voting standard to a more stringent standard known as majority voting (MV). Using a regression discontinuity design, we document abnormal returns of 1.43–1.60 % around annual meeting dates where shareholder proposals to adopt MV are voted upon, suggesting that shareholders perceive the adoption of MV as value-enhancing. We document an increase in boards’ responsiveness to shareholders at MV firms. In particular, relative to a propensity score-matched control sample, firms adopting MV exhibit an increase in the rate of implementation of shareholder proposals supported by a majority vote and in the responsiveness to votes withheld from directors up for election. We do not find a relation between votes withheld and subsequent director turnover, regardless of the election standard. Overall, it appears that, rather than a channel to remove specific directors, director elections are viewed by shareholders as a means to obtain specific governance changes and that, in this respect, their ability to obtain such changes is stronger under a MV standard.

Original languageEnglish (US)
Pages (from-to)1-41
Number of pages41
JournalReview of Accounting Studies
Issue number1
StatePublished - Mar 2015
Externally publishedYes


  • Director elections
  • Director turnover
  • Majority voting
  • Shareholder activism

ASJC Scopus subject areas

  • Accounting
  • Business, Management and Accounting(all)


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