We provide evidence on optional stock dividends, a mechanism that allows shareholders to choose between cash dividends and the equivalent number of new shares in lieu of cash. We find that, in contrast to dividend cuts, shareholders do not view this option as bad news. When firms offer optional stock dividend in lieu of cash dividends, the market does not react negatively. Facing the choice between cash and stock dividend, shareholders choose 55% of the total dividend in the form of stock dividend. Our findings suggest that firms that are more committed to paying dividends are more likely to offer optional stock dividends to their shareholders.

This paper examines the influence of CEO reputation on corporate proxy voting. Relying on prestigious business awards (through which the CEO is elevated to superstar status) as salient shocks to CEO reputation, we find that shareholders in aggregate, and mutual funds in particular, are more likely to vote with management (i.e., against shareholder proposals) when the CEO is a superstar. We use a battery of matching procedures to mitigate the concern that these results are driven by selection. We further show that shareholder proposals, especially contested ones and those with positive ISS recommendations, are significantly more likely to fail when the CEO is a superstar. Our results suggest that investors are sensitive to the external appraisal conveyed by the superstar status and prefer not to oppose management.

This paper argues that there exists a fundamental asymmetry between relationship-specific investments (RSI) made for downstream firms (customer-specific investments – CSI) and for upstream firms (supplier-specific investments – SSI). Both types of RSI can create a hold-up problem, but everything else equal, suppliers have higher bargaining power, rendering hold-ups by suppliers more dangerous than hold-ups by customers. Using unique data on Vietnamese SMEs that allow for a clean separation between CSI and SSI, we demonstrate that this leads to less frequent SSI and that the few firms making SSI will be more risky and financially constrained. We discuss the implications of this finding for supply chain management and public policy destined to foster RSI.