Impact of Shareholder Proposals on the Functioning of the Market for Corporate Control

Document Type

Article

Source of Publication

Financial Review

Publication Date

8-1-2017

Abstract

© 2017 The Eastern Finance Association Firms receiving shareholder proposals are 16% more likely to become a target of acquisition. Such companies earn approximately 7.2% lower acquisition returns compared to gains for targets with no proposals. Higher acquisition likelihood and lower target returns are primarily associated with proposals drawing a larger proportion of favorable votes, larger voter turnout, as well as with proposals submitted shortly before takeover announcements, and motivated by the removal of antitakeover provisions. Our findings suggest that shareholder proposals can assist bidders in the identification of targets or signal the willingness of target shareholders to accept bids with lower premiums.

ISSN

0732-8516

Publisher

Wiley-Blackwell

Volume

52

Issue

3

First Page

347

Last Page

371

Disciplines

Business

Keywords

external governance, G30, G34, internal governance, market for corporate control, mergers & acquisitions, shareholder activism, shareholder gains, shareholder proposals

Scopus ID

85024366735

Indexed in Scopus

yes

Open Access

no

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