Board of Directors' Responsiveness to Shareholders: Evidence from Shareholder Proposals
Coauthor(s): Yonca Ertimur, Stephen Stubben.
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Using a sample of 620 non-binding, majority-vote (MV) shareholder proposals
between 1997 and 2004, we analyze the frequency, determinants and consequences of boards'
implementation decisions. The frequency of implementation has almost doubled after 2002,
reaching more than 40%. 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 matter. Outside directors implementing
MV shareholder proposals experience a one-fifth reduction in the likelihood of losing their board
seat and in the likelihood of losing other directorships.
Source: Journal of Corporate Finance
Ertimur, Yonca, Fabrizio Ferri, and Stephen Stubben. "Board of Directors' Responsiveness to Shareholders: Evidence from Shareholder Proposals." Journal of Corporate Finance 16 (2010): 53-72.