Impact of Shareholder Proposals on the Functioning of the Market for Corporate Control |
| |
| Authors: | Rwan El‐Khatib Kathy Fogel Tomas Jandik |
| |
| Affiliation: | 1. College of BusinessZayed University;2. Zinoplex, Inc.;3. Sam M. Walton College of BusinessUniversity of Arkansas |
| |
| Abstract: | Firms receiving shareholder proposals are 16% more likely to become a target of acquisition. Such companies earn approximately 7.2% lower acquisition returns compared to gains for targets with no proposals. Higher acquisition likelihood and lower target returns are primarily associated with proposals drawing a larger proportion of favorable votes, larger voter turnout, as well as with proposals submitted shortly before takeover announcements, and motivated by the removal of antitakeover provisions. Our findings suggest that shareholder proposals can assist bidders in the identification of targets or signal the willingness of target shareholders to accept bids with lower premiums. |
| |
| Keywords: | shareholder activism shareholder proposals mergers & acquisitions internal governance external governance market for corporate control shareholder gains G30 G34 |
|
