Managerial Reliance on the Retail Shareholder Vote: Evidence from Proxy Delivery Methods

摘要

Recent studies document the increasing effectiveness of shareholder voting as a monitoring mechanism. Because both directors and the market respond to shareholder votes, management has stronger incentives to influence voting outcomes. We identify one channel through which management can affect voting outcomes: increasing the turnout of (typically management-friendly) retail shareholders. Our study focuses on an observable managerial choice of how to deliver proxy materials to maximize retail turnout. Management can opt to send a full set of proxy materials to all shareholders, which increases retail turnout but also increases printing and mailing costs, or they can send a notice directing shareholders to proxy materials available online, which reduces costs but also decreases retail turnout. We find that managers are more likely to choose to deliver a full set of proxy materials when there are contentious items on the ballot for which they need additional voting support; and, indeed, the resulting support increases the likelihood that voting outcomes will align with management recommendations.