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Abstract

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The AGM in Europe
Type: Book
ISBN: 978-1-78743-533-9

Article
Publication date: 29 November 2011

David B.H. Martin and Keir D. Gumbs

The purpose of this paper is to consider the consequences of the July 22, 2011 decision of the US Court of Appeals for the DC Circuit in the case of Business Roundtable

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Abstract

Purpose

The purpose of this paper is to consider the consequences of the July 22, 2011 decision of the US Court of Appeals for the DC Circuit in the case of Business Roundtable and Chamber of Commerce v. Securities and Exchange Commission (BRT v. SEC) on current and future SEC rulemakings. The case involved the vacating of the SEC's shareholder proxy access rule.

Design/methodology/approach

The paper reviews the court's findings regarding the SEC's rulemaking procedures and analyzes how those findings will inform the SEC's future actions to adopt rules in the proxy access area, as well as future SEC rulemaking in other areas.

Findings

The paper finds that the SEC is unlikely, at this time, to undertake future rulemaking involving shareholder access to the proxy statement. At the same time, the SEC may well lift the stay that it voluntarily placed on related amendments to its shareholder proposal rule. These amendments would permit shareholder proposals to companies regarding access to the proxy statement.

Practical implications

Companies should consider how they will respond to shareholder proposals to adopt proxy access regimes. Shareholders should consider what kinds of proposals they may wish to submit to companies regarding proxy access.

Originality/value

This paper should be of interest to public companies, including investment companies, and shareholders of such companies, and their advisers, in terms of corporate governance mechanisms and engagement with shareholder concerns and inputs.

Details

Journal of Investment Compliance, vol. 12 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 4 July 2016

John Newell, Arthur McGivern and David Roberts

To explain SEC Division of Corporation Finance Staff Legal Bulletin No. 14H (SLB 14H), which provides interpretive advice on how the Staff will treat shareholder proposals…

Abstract

Purpose

To explain SEC Division of Corporation Finance Staff Legal Bulletin No. 14H (SLB 14H), which provides interpretive advice on how the Staff will treat shareholder proposals under the “directly conflicts” and “ordinary business” exclusions under Rule 14a-8.

Design/methodology/approach

Explains Rule 14-8 concerning the inclusion of shareholder proposals in a company’s proxy materials, Rule 14a-8(i)(9) on substantive bases for exclusion of shareholder proposals, guidance from SLB 14H on shareholder proposals that do and do not directly conflict with company proposals, Staff guidance prior to SLB 14H, the “ordinary business” exclusion under Rule 14a-8(i)(7), and how SEC staff guidance differs from the majority opinion in Trinity Wall Street v. Wal-Mart Stores, Inc. on the ordinary business exclusion.

Findings

The SEC Staff’s new standard for conflicting proposals is likely to make it more difficult for companies to exclude a shareholder proposal that is different from a management proposal if the two proposals are not “mutually exclusive”. Staff guidance also states that companies may not exclude proposals focusing on a significant policy issue under the ordinary business exclusion if “the proposals would transcend the day-to-day business matters and raise policy issues so significant that it would be appropriate for a shareholder vote”.

Originality/value

Expert guidance from experienced securities and financial services lawyers.

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Journal of Investment Compliance, vol. 17 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 2 January 2009

Michael E. Raynor

Many investors view maximizing shareholder wealth as the only obvious and defensible, corporate objective function. But to contradict this view, the paper aims to consider

3517

Abstract

Purpose

Many investors view maximizing shareholder wealth as the only obvious and defensible, corporate objective function. But to contradict this view, the paper aims to consider the shortcomings of the “shareholder first” view and offer an alternative.

Design/methodology/approach

To make strategic tradeoffs effectively the whole organization needs a clear sense of what it is trying to achieve, and how choosing between specified alternatives serves its highest goal. Organizations need a “best metric” for the corporate strategy. The paper considers what ultimate end should corporations – that is, the managers who run them – refer to when making these difficult and sometimes painful tradeoffs?

Findings

The widely held shareholder‐value view holds that every choice should be made with an eye to creating as much financial wealth as possible for the providers of equity capital. But none of the familiar justifications for this view stand up to scrutiny. It is not true that: shareholders are owners; shareholders bear the most risk; maximizing shareholder value is a clear goal; and maximizing shareholder value is a legal requirement.

Practical implications

The corporation‐first view is a better alternative principle. It is that the ultimate purpose of the corporation is the survival of corporation itself. The corporation should not seek to maximize the interests of shareholders, or employees, or suppliers, or the environment, or anyone or anything else. The Costco model is examined.

Originality/value

This paper provokes some serious soul‐searching about the largely unquestioned primacy of shareholder interests as the objective function of the corporation and makes the case for a better alternative.

Details

Strategy & Leadership, vol. 37 no. 1
Type: Research Article
ISSN: 1087-8572

Keywords

Article
Publication date: 19 April 2011

Aiwu Zhao and Alexander J. Brehm

The purpose of this paper is to investigate whether cumulative voting can help ease the conflicts between board of directors and minority shareholders.

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Abstract

Purpose

The purpose of this paper is to investigate whether cumulative voting can help ease the conflicts between board of directors and minority shareholders.

Design/methodology/approach

The authors use voting result of shareholder proposals as an indicator of the level of conflicts between board and minority shareholders. OLS regression and non‐parametric Kruskal‐Wallis tests have been applied in the analysis.

Findings

It was found that cumulative voting can help ease the conflicts between board of directors and minority shareholders. Also, the tension between board and minority shareholders is affected by both corporate governance factors and a company's stock performance.

Research limitations/implications

In general, the research result indicates that cumulative voting is still an effective mechanism that can lower investors' costs on monitoring boards of directors.

Practical implications

Considering the huge amount of resources used in shareholder campaigns, the research result indicates that cumulative voting can be an efficient choice to alleviate the confrontation between dissenting shareholders and board of directors.

Social implications

With the change of minority shareholder structure, it is necessary to examine whether the corporate world needs to reconsider the adoption of cumulative voting.

Originality/value

The authors use a novel proxy, voting results of investor proposals, to measure the conflicts between board of directors and minority shareholders. This is also one of the few papers focusing on the monitoring cost side of the agency cost problem in corporate governance literature.

Details

Managerial Finance, vol. 37 no. 5
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 3 June 2022

Yan Wang, Rong Dai, Shufang Xu and Li Luo

This paper aims to analyze the inhibitory effect of non-controlling shareholders governance mechanism on the retention of self-interest management, which provides…

Abstract

Purpose

This paper aims to analyze the inhibitory effect of non-controlling shareholders governance mechanism on the retention of self-interest management, which provides theoretical support and practical basis for standardizing the control transfer behavior of listed companies and improving the governance mechanism of non-controlling shareholders.

Design/methodology/approach

Taking A-share listed companies with control transfer from 2000 to 2017 as sample, this paper investigates the strategy, path and retention consequence of the target company’s market selected top management who collude with the new controlling shareholder to avoid the risk of being taken over by control transfer.

Findings

This research explores that negative earnings management behavior may reduce the real premium of control transfer after deducting the “shell value”. The lower the real premium of control transfer after deducting the “shell value”, the higher the probability of management retention after control transfer. This paper also reveals that the real premium of control transfer after deducting the “shell value” plays complete mediation role between the negative earnings management behavior of the management and their own retention. The mediation effect of “collusion and price reduction” in the control transfer will be inversely moderated by the governance mechanism of noncontrolling shareholders including the old shareholders of the seller.

Originality/value

This paper not only constitutes a supplement to the existing literature but also provides empirical evidence for standardizing the control transfer behavior of listed companies, and making good use of the old shareholders of the seller to improve corporate governance and alleviate agency conflict after control transfer.

Details

Nankai Business Review International, vol. 13 no. 3
Type: Research Article
ISSN: 2040-8749

Keywords

Book part
Publication date: 26 August 2019

Arnaud Manas

Before it was fully nationalized in 1945, the Banque de France was a listed company that distributed dividends to its shareholders and was listed on the Paris stock…

Abstract

Before it was fully nationalized in 1945, the Banque de France was a listed company that distributed dividends to its shareholders and was listed on the Paris stock exchange. By comparing with other stocks and indexes, I show that, in spite of large earnings, Banque de France’s stock was a lackluster but popular investment. By examining the distribution of profits between the state and ordinary shareholders, I show that the state began to exert an influence over the Bank well before its nationalization, in the nineteenth century, amounting to a stealthy takeover. I then go on to analyze the Bank’s formal governance framework and the power of its regents (directors). Using a novel method to compute the shareholders’ statistical distribution, I conclude that small new shareholders who were less sophisticated bought predominantly shares from old larger shareholders. Eventually, most of the shareholders were “petit-bourgeois” passive rentiers who accepted the mediocre performance and kept reelecting the regents. I conclude by saying that the power of the 200 largest shareholders (“200 families”) was a political myth with little foundation in reality.

Book part
Publication date: 30 March 2017

Narjess Boubakri, Jean-Claude Cosset and Dev Mishra

We examine the market valuation of targets with multiple large shareholders (MLS) and single large shareholder (SLS) structures, in an international sample of M&A…

Abstract

We examine the market valuation of targets with multiple large shareholders (MLS) and single large shareholder (SLS) structures, in an international sample of M&A announcement in 19 countries outside North America. We find that the presence and power of MLS in these firms are negatively associated with abnormal returns and first-bid-to-merger-completion returns, suggesting that MLS mitigate agency problems in the target, and hence their acquisition is perceived as “a loss of good governance.” The negative association between MLS targets and returns is stronger in widely held firms suggesting that MLS indeed curb expropriation of minority shareholders. By contrast, when the second largest shareholder in the MLS structure of the target is a family, we find positive cumulative abnormal returns at the merger announcement, suggesting exacerbated agency problems in these firms that should benefit from the “acquisition of good governance.” Our evidence is robust to a battery of tests and to addressing potential endogeneity.

Book part
Publication date: 27 January 2022

Loizos Heracleous and Luh Luh Lan

Concentrated ownership implies greater alignment between ownership and control, mitigating the agency problem. However, it may also engender governance challenges such as…

Abstract

Concentrated ownership implies greater alignment between ownership and control, mitigating the agency problem. However, it may also engender governance challenges such as funds appropriation through related party transactions and the oppression of minority shareholders, especially in the context of weak legal systems. We draw from legal theory (the tradeoff controlling shareholder model and private benefits of control) and from organization theory (socioemotional wealth), to suggest that concentrated ownership can be beneficial in both robust and weak legal systems for different reasons. We advance theory on the effects of controlling shareholders and suggest that the longer-term outlook associated with engaged concentrated ownership can aid the shift of the corporation toward Berle and Means' (1932, p. 355) “third possibility” of corporations serving the interests of not just the stockholders or management but also of society.

Details

The Corporation: Rethinking the Iconic Form of Business Organization
Type: Book
ISBN: 978-1-80043-377-9

Keywords

Book part
Publication date: 15 December 2011

Orhan Akisik

Purpose – The aim of this paper is to examine the relationship of the efficient management of shareholder value as the main objective of corporate governance systems with…

Abstract

Purpose – The aim of this paper is to examine the relationship of the efficient management of shareholder value as the main objective of corporate governance systems with stakeholder theory.

Design/Methodology – The study uses data from 29 emerging market economies from 1997 to 2006. In order to control possible endogeneity issue, generalized two-stage least squares (G2SLS) and generalized method of moments (GMM) estimation techniques were conducted using country-level panel data.

Findings – The results provide evidence that the efficient management of shareholder value is strongly associated with managers' credibility, social responsibility, employment, and customer satisfaction, suggesting that emerging market economies should consider the interests of stakeholders for the efficient management of shareholder value.

Originality/Value – This is the first study of its kind that attempts to explore the association of the efficient management of shareholder value with country-level determinants of stakeholder theory.

Research Limitations/Implications – The lack of sufficient data is a major problem in international studies. This study also has some limitations in this respect as some emerging economies have not been included in the sample.

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