Review of Financial Studies Vol. 23 No. 12 2010

Interim News and the Role of Proxy Voting Advice

Cindy R. Alexander¹; Mark A. Chen²; Duane J. Seppi³; Chester S. Spatt³

¹ United States Securities and Exchange Commission · ² Georgia State University · ³ Carnegie Mellon University

Abstract

This article examines the information content and consequences of third-party voting advice that arrives as news at an interim stage in corporate proxy contests. We first document significant stock returns around announcements of proxy vote recommendations. We then develop a multi-equation empirical procedure for disentangling the price impact of prediction effects (changes in contest outcome probabilities) from the price impact of certification effects (changes in outcome-contingent valuations). Both effects are present in the data: Voting advice is both predictive about contest outcomes and informative about the ability of dissidents to add value. Consequently, proxy advice plays a dual informational role.

DOI

10.1093/rfs/hhq111

Volume

23

Issue

12

Pages

4419-4454

Language

en

Sources

openalex crossref

Cite

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