Does the director election system matter? Evidence from majority voting

• 成果类型: Article
• 署名作者: Ertimur, Yonca; Ferri, Fabrizio; Oesch, David
• 署名单位: University of Colorado System; University of Colorado Boulder; Columbia University; University of St Gallen
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-014-9284-9
• 发表日期: 2015
• 页码: 1-41
• 关键词: regression discontinuity designs; corporate governance; SHAREHOLDER ACTIVISM; Firm value; VOTE; COMPENSATION; PROPOSALS; access; boards

摘要

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.