Marco Becht, Andrea Polo, Stefano Rossi Does Mandatory Shareholder Voting Prevent Bad Acquisitions? (01 May 2014) Available at ECGI: http://ecgi.global/working-paper/does-mandatory-shareholder-voting-prevent-bad-acquisitions
Shareholder voting on corporate acquisitions is controversial. In most countries acquisition decisions are delegated to boards and shareholder approval is discretionary, which makes existing empirical studies inconclusive. We study the U.K. setting where shareholder approval is imposed exogenously via a threshold test that provides strong identification. U.K.
shareholders gain 8 cents per dollar at announcement with mandatory voting, or $13.6 billion over 1992-2010 in aggregate; without voting U.K. shareholders lost $3 billion. Multidimensional regression discontinuity analysis supports a causal interpretation. The evidence suggests that mandatory voting imposes a binding constraint on acquirer CEOs.
We test the hypothesis that a specific aspect of culture – trust in others – affects shareholder voting behavior as it lowers investors’ concerns of being expropriated. We find consistent evidence that the percentage of votes cast at shareholder...Read more
Current shareholder engagement systems face large classical inefficiencies. First, due to the large chains of intermediaries in the current securities models, transaction costs are high and shareholder votes and other information are not always...Read more
This paper estimates a spatial model of proxy voting, the W-NOMINATE method for scaling legislatures, and maps institutional investors onto a left-right dimension based on their votes for fiscal year 2012. The far-left are socially responsible...Read more
Unlike the case of cross-border trade, there is no explicit international governance regime for cross-border M&A; rather, there is a shared understanding that publicly traded companies are generally for purchase by any bidder – domestic or...Read more