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We study shareholder voting in a model in which trading affects the composition of the shareholder base. Trading and voting are complementary, which gives rise to self-fulfilling expectations about proposal acceptance and multiple equilibria. Prices and shareholder welfare can move in opposite directions, so the former may be an invalid proxy for the latter.
Increasing liquidity can reduce welfare, because it allows extreme shareholders to gain more weight in voting. Delegating decision-making to the board can improve shareholder value. However, the optimal board is biased, does not represent current shareholders, and may not garner support from the majority of shareholders.
This paper develops a theory of blockholder governance and the voting premium. A blockholder and dispersed shareholders first trade in a competitive...
The lack of board diversity is one of the most controversial topics in corporate board governance. We investigate one important influence on diversity...