(Revise & resubmit at Management Science)
Managerial resistance precludes half of shareholder-initiated proposals from reaching the ballot stage. I construct a novel dataset of excluded and withdrawn proposals from the Securities and Exchange Commission's responses to managers' exclusion requests. An examination of announcement returns to the exclusion and withdrawal decisions reveals that non-voted proposals have a value-destroying nature. Special interest investors pursuing self-serving agendas and retail investors advocating for one-size-fits-all reforms explain the harmful character of non-voted proposals. I correct for the selection bias induced by managerial resistance and show that focusing only on voted proposals overstates the shareholder proposals-driven value creation.
35th AFFI Conference (ESCP, 2018), 16th BFRF Conference (Belgian National Bank, 2018), SFI Research Days (Gerzensee, 2018), Columbia University Finance PhD Brownbag Seminar (Columbia Business School, 2020), 3rd Annual Dauphine Finance Ph.D. Workshop (Dauphine University, 2020), 17th Corporate Finance Day (HEC Liège, 2020).
What is the impact of mutual funds' announced ESG preferences on portfolio firms?
Mutual funds must publish policies announcing how they vote on the different ballot items at the shareholder meetings of their portfolio firms. I manually collect 17,000 of these policies for a sample of 29 of the largest mutual fund families over 2006-2018. I find that voting policies are a major predictor of funds' voting behavior. Exploiting staggered changes in funds' voting policies, I show that investee companies adopt the preferred governance structure of their mutual fund shareholders. This adoption is the result of active voting. Announced voting policies also stimulate strategic proposal submissions by non-mutual fund shareholders.
SFI Research Days (Gerzensee, 2020)