Working Paper: NBER ID: w15143
Authors: Cindy R. Alexander; Mark A. Chen; Duane J. Seppi; Chester S. Spatt
Abstract: This paper studies the information content and consequences of third-party voting advice issued during proxy contests. We document significant abnormal stock returns around proxy vote recommendations and develop an estimation procedure for disentangling stock price effects due to changes in outcome probabilities from those due to changes in outcome-contingent valuations. We find that voting advice is a good predictor of contest outcomes and that vote recommendations appear to certify the extent to which dissidents can add value. Thus, proxy advice seems to play a dual informational role in financial markets.
Keywords: proxy voting; advisory services; stock returns; proxy contests
JEL Codes: G20; G24; G30; G34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| proxy advice (Y60) | stock prices (G12) |
| vote recommendations (D79) | stock prices (G12) |
| certification hypothesis (C12) | stock prices (G12) |
| vote recommendations (D79) | contest outcomes (C52) |
| prodissident recommendation (Y40) | probability of dissident win (D79) |