What Are the Firm Value Implications of SEC-Challenged Shareholder Proposals?

• 成果类型: Article; Early Access
• 署名作者: Couvert, Maxime
• 署名单位: University of Hong Kong
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.01344
• 发表日期: 2024
• 关键词: CORPORATE GOVERNANCE; Corporate social responsibility; SHAREHOLDER PROPOSALS; shareholder empowerment; Rule 14a-8

摘要

The Securities and Exchange Commission (SEC) permits managers to request the exclusion of shareholder-initiated proposals. I construct a novel data set of excluded and withdrawn proposals from the SEC's responses to managers' requests. An examination of announcement returns to withdrawal and exclusion decisions demonstrates that SEC-challenged proposals are value destroying. I find that special interest investors pursuing self-serving agendas and retail investors advocating for one-size-fits-all reforms explain the value-destroying nature of SEC-challenged proposals. On average, the SEC challenge benefits firm value by filtering out these harmful proposals. However, a regression discontinuity design reveals that proposals the SEC refuses to exclude may receive majority shareholder support and destroy firm value.