Managerial response to shareholder empowerment: evidence from majority-voting legislation changes

Cuñat, Vicente ORCID: 0000-0001-7504-2801, Lu, Yiqing and Wu, Hong (2025) Managerial response to shareholder empowerment: evidence from majority-voting legislation changes. Journal of Financial and Quantitative Analysis. ISSN 0022-1090

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Abstract

We study how managers react to shareholder empowerment that makes votes on shareholder proposals binding. We empirically exploit staggered legislative changes that introduce such empowerment for proposals regarding majority voting in director elections. We find that managers become more responsive to shareholder requirements by initiating majority voting through either management proposals or governance guidelines. This early action crowds out shareholder proposals. Further results suggest compromised implementation: Managers adopt provisions that give them greater control over the channel of implementation and allow them to retain directors who fail in elections. Our results suggest that managers retain substantial discretion to modulate shareholder requirements. This article was partially completed when Wu was at Fudan University. Any errors are attributable solely to the authors.

Item Type:	Article
Additional Information:	© 2025 The Authors
Divisions:	Finance
Subjects:	H Social Sciences > HG Finance H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
JEL classification:	G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency; Event Studies
Date Deposited:	14 Nov 2023 15:21
Last Modified:	15 Jul 2025 16:42
URI:	http://eprints.lse.ac.uk/id/eprint/120742

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