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Contribution Details
| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Does the director election system matter? Evidence from majority voting |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | Review of Accounting Studies |
| Publisher | Springer |
| Geographical Reach | international |
| ISSN | 1380-6653 |
| Volume | 20 |
| Number | 1 |
| Page Range | 1 - 41 |
| Date | 2015 |
| Abstract Text | 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. |
| Digital Object Identifier | 10.1007/s11142-014-9284-9 |
| Other Identification Number | merlin-id:10117 |
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