Governance Changes through Shareholder Initiatives: The Case of Proxy Access

2020 ◽  
pp. 1-32 ◽  
Author(s):  
Tara Bhandari ◽  
Peter Iliev ◽  
Jonathan Kalodimos
Keyword(s):  
Market Reaction ◽  
Regulatory Change ◽  
Shareholder Proposals ◽  
Governance Changes

Abstract We study a regulatory change that led to over 300 shareholder proposals to instate proxy access and more than 250 firms adopting proxy access from 2012 to 2016. The firms expected to benefit most from proxy access have the most positive market reaction to receiving a proposal, but adoptions are not concentrated at these firms. We find that proposing and voting shareholders do not discriminate between firms that would or would not benefit and that management resists proxy access at the firms that stand to benefit most. This process results in the concentration of adoptions at large, already-well-governed firms.

scholarly journals The value of voting rights in Italian cooperative banks: a quasi-natural experiment

2020 ◽  
Vol 46 (7) ◽  
pp. 861-882
Author(s):  
Marco Botta ◽  
Luca Vittorio Angelo Colombo
Keyword(s):  
Event Study ◽  
Natural Experiment ◽  
Market Reaction ◽  
Control Method ◽  
Regulatory Change ◽  
Synthetic Control ◽  
Content Type ◽  
Market Values ◽  
Cooperative Banks ◽  
The One

PurposeIt is widely believed that deviating from the “one share-one vote” principle leads to corporate inefficiencies. To measure the market appraisal of this potential inefficiency, this study aims to analyse the market reaction to a change from the “one head-one vote” to the “one share-one vote” mechanism by means of a quasi-natural experiment: a 2015 Italian reform forcing all listed cooperative banks to transform into joint-stock companies.Design/methodology/approachTo investigate the market reaction around the regulatory change, this study uses both a traditional event study and a novel methodology based on the synthetic control method as well as on Bayesian statistical techniques.FindingsThis study estimates the market valuation of the effects of the governance change around the event date being equal to a cumulative average increase in market value of about 14 per cent using an event study methodology, and of about 13 per cent using Bayesian techniques.Originality/valueThis study provides evidence on the fact that the voting mechanism significantly affects the market values of companies. The study also introduces a novel statistical technique that can be extremely useful in analysing single-firm event studies.

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