Template-Type: ReDIF-Paper 1.0
Title: Shareholder Votes on Sale
Author-Name: Andre Speit
Author-Email: aspeit@uni-bonn.de
Author-Name: Paul Voss
Author-Email: paul-voss@uni-bonn.de

Classification-JEL: G32, G34
Keywords: blockholder, decoupling techniques, empty voting, hostile activism, share-holder activism, vote trading

Abstract: This paper examines the effect of vote trading on shareholder activism and corporate governance. We show that vote trading enables hostile activism because voting rights trade at inefficiently low prices even when the activist’s motives are transparent. Our results explain empirical findings of low vote prices (Christofferson et al. 2007) and inefficient outcomes (Hu & Black 2006). Though an activist with superior information can facilitate information transmission through vote trading, traditional activist intervention techniques provide the same information transmission without the downsides inherent in vote trading. Our analysis of potential policy measures suggests that adopting simple majority rules and excluding bought votes offer the most promising intervention avenues.

Note: 
Length: 47
Creation-Date: 2020-08
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp200
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2020_200