Why Do Managers Fight Shareholder Proposals? Evidence from No-Action Letter Decisions

Matsusaka, John G.; Ozbas, Oguzhan; Yi, Irene

doi:10.2139/ssrn.2881408

SSRN Journal

2016

DOI: 10.2139/ssrn.2881408

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Why Do Managers Fight Shareholder Proposals? Evidence from No-Action Letter Decisions

John G. Matsusaka

Oguzhan Ozbas

Irene Yi

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Cited by 4 publications

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“…However,Matsusaka, Ozbas, and Yi (2017) find that the market also reacts positively when the SEC permits a challenged proposal to be omitted from the proxy, suggesting that the challenged proposals are value-destroying.…”

mentioning

confidence: 87%

Management (of) Proposals

2018

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confidence: 87%

Management (of) Proposals

2018

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The nail that sticks out: corporate social responsibility and shareholder proposals

2022

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Opportunistic Proposals by Union Shareholders

Matsusaka

Ozbas

2015

SSRN Journal

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Effective corporate governance requires mechanisms that allow shareholders to influence corporate decisions. This paper investigates the use of shareholder proposals, an increasingly prominent governance mechanism, by labor unions. Activist union pension funds are subject to cross-pressures: they wish to increase fund returns to help beneficiaries but also to aid current union workers. We show theoretically that shareholder proposals can be used as bargaining chips in contract negotiations. Empirically, we use variation in the expiration of collective bargaining agreements to identify exogenous changes in the value of making proposals. We find that during contract negotiation years, unions increase the number of proposals they make by about one-quarter (and by about two-thirds during contentious negotiations), and change the subject of proposals to focus on matters personally costly to managers. We do not find similar changes in proposal behavior by nonunion shareholders. Opportunistic union proposals are also associated with better wage agreements for the union. The evidence suggests that some union proposals are intended to influence collective bargaining outcomes rather than maximize shareholder value, and that increasing proposal rights will not necessarily help shareholders at large if some shareholders use those rights to advance their private interests.

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Why Do Managers Fight Shareholder Proposals? Evidence from No-Action Letter Decisions

Cited by 4 publications

References 39 publications

Management (of) Proposals

Management (of) Proposals

The nail that sticks out: corporate social responsibility and shareholder proposals

Opportunistic Proposals by Union Shareholders

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