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Book part
Publication date: 3 May 2018

Charles P. Cullinan, Lois S. Mahoney and Pamela B. Roush

We examine the perceived influence of externally generated firm ratings of corporate social responsibility (CSR) on voting for shareholder-sponsored CSR proposals. Using…

Abstract

We examine the perceived influence of externally generated firm ratings of corporate social responsibility (CSR) on voting for shareholder-sponsored CSR proposals. Using stakeholder and legitimacy theories, we introduce two rationales that relate shareholder voting decisions to the firm’s CSR performance: the complementary perspective where investors rely on management’s branding or image of the firm for CSR performance, and the sufficiency perspective where shareholders consider legitimacy effects of firm CSR performance. Our examination of 473 CSR shareholder-sponsored proposals during the 2013 to 2015 proxy seasons reveals a negative relationship between support for shareholder-sponsored CSR proposals and CSR strengths, particularly for social and environmental CSR strengths. We also find a positive relationship between support for shareholder-sponsored CSR proposals and CSR concerns, particular in the area of environmental CSR concerns. These results partially support the sufficiency perspective that incorporates shareholder legitimacy concerns. When companies have poor CSR performance, shareholders may view further CSR initiatives as beneficial to the firm.

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Research on Professional Responsibility and Ethics in Accounting
Type: Book
ISBN: 978-1-78754-973-9

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Article
Publication date: 27 October 2017

S. Subramanian

This paper aims to explore the voting recommendations made by proxy advisory firms in India by descriptively analyzing the “Vote Against” recommendations made by two proxy…

Abstract

Purpose

This paper aims to explore the voting recommendations made by proxy advisory firms in India by descriptively analyzing the “Vote Against” recommendations made by two proxy advisory firms for shareholder resolutions for the listed Indian firms. It also empirically tests the relationship between proportion of “Vote Against” recommendations and the parameters which are proved to be influencing corporate governance practices of a firm.

Design/methodology/approach

Empirical analysis of proxy voting recommendations for a sample of 77 listed non-financial Indian firms across four financial years.

Findings

The paper finds that two categories of shareholders proposals, “reappointment of non-executive directors” and “remuneration of statutory auditors”, account for 83.5 per cent of “Vote Against” recommendations. Further, there are significant differences in the proportion of “Vote Against” recommendations based on the type of “controlling ownership” of the firms. The regression analysis indicates that the relationships between proportion of “Vote Against” recommendations and determinants of corporate governance practices are mostly in line with the a priori expectations, as far as ownership is concerned but requires further analysis for other parameters.

Research limitations/implications

Exploratory nature of this paper opens up new research issues in the upcoming Indian Proxy advisory industry. It suggests that the future research should consider the controlling ownership as an important parameter while analyzing the proxy firm recommendations.

Practical implications

Indian proxy advisory industry requires lots of nurturing from the regulators, and this exploratory study provides the basic insights in this regard. It also highlights potential corporate governance issues where the regulators need to tighten the corporate governance norms, like reappointment of independent directors and appointment of statutory auditors.

Originality/value

Pioneering Study in understanding the proxy advisory voting recommendations in an emerging market.

Details

Journal of Indian Business Research, vol. 9 no. 4
Type: Research Article
ISSN: 1755-4195

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Article
Publication date: 13 July 2015

Chrispas Nyombi

– The purpose of this paper is to determine whether the Board Neutrality Rule and the primacy afforded to shareholders during takeovers is justified under common law and policy.

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Abstract

Purpose

The purpose of this paper is to determine whether the Board Neutrality Rule and the primacy afforded to shareholders during takeovers is justified under common law and policy.

Design/methodology/approach

The paper provides a detailed assessment of the role play by the board neutrality rule and whether this is supported by takeover law and Company law. A review of case law and statutes is provided. The paper is largely analytical.

Findings

The paper finds little justification for the continued imposition of the Board Neutrality Rule.

Originality/value

The paper adds to the growing body of research literature which has analysed the role played by the Board Neutrality Rule during takeovers.

Details

International Journal of Law and Management, vol. 57 no. 4
Type: Research Article
ISSN: 1754-243X

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Article
Publication date: 7 September 2020

J. Samuel Baixauli-Soler, Gabriel Lozano-Reina and Gregorio Sánchez-Marín

The purpose of this paper is to analyze the influence of managerial discretion on the effectiveness of say on pay (SOP) as a governance mechanism. This goal covers an…

Abstract

Purpose

The purpose of this paper is to analyze the influence of managerial discretion on the effectiveness of say on pay (SOP) as a governance mechanism. This goal covers an important gap since the issue of how effective SOP is in promoting more aligned compensation has proved somewhat controversial.

Design/methodology/approach

This empirical research opted for a panel methodology for the period 2003–2017, using a sample of large UK listed-companies (specifically, 3,445 firm-year observations). Data were obtained from several sources (Manifest Ltd, BoardEx, Worldscope, Factset Ownership and DataStream).

Findings

Results show that managerial discretion plays an important role in the effectiveness of SOP as a mechanism for increasing aligned CEO compensation. While individual discretion (latitude of objectives) exerts a negative effect, contextual discretion (latitude of action) increases SOP effectiveness. The global effect of managerial discretion is positive when there is high level of both individual and contextual discretion.

Originality/value

This empirical study provides evidence concerning an emerging topic in the literature regarding the impact of SOP as a shareholder activism mechanism of corporate governance on executive compensation. By taking managerial discretion into consideration as a relevant moderating factor, it also offers a better explanation of SOP effectiveness as a governance mechanism.

Details

Management Decision, vol. 59 no. 6
Type: Research Article
ISSN: 0025-1747

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Book part
Publication date: 10 September 2021

Lois S. Mahoney, Daniel R. Brickner and William LaGore

This research is one of the first studies to examine the effects of CSR disclosures on a firm’s decision to purchase back their own shares of stocks. Additionally, the…

Abstract

This research is one of the first studies to examine the effects of CSR disclosures on a firm’s decision to purchase back their own shares of stocks. Additionally, the authors examine whether the effect of CSR disclosures is stronger than the effect of CSR performance on the decision to repurchase shares. Examining firms in the United States, the authors find that total CSR disclosures and the CSR disclosures related to the dimensions of social, environmental, and governance are significantly and positively related to the number of shares that a firm buys back. Additionally, the authors find that the effects of CSR disclosures are stronger for total and the CSR dimensions of social and governance than for CSR performance. For the environmental dimension of CSR, both disclosure and performance scores are significant. This research expands our understanding of the impact of CSR disclosure by showing the importance it plays in the decision to buy back stock and implies that firms that repurchase their stock are more socially responsive than firms that do not. Finally, it contributes to the growing literature on how CSR disclosure has a different impact than CSR performance on firm decisions and outcomes.

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Research on Professional Responsibility and Ethics in Accounting
Type: Book
ISBN: 978-1-80071-758-9

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Book part
Publication date: 3 May 2018

Abstract

Details

Research on Professional Responsibility and Ethics in Accounting
Type: Book
ISBN: 978-1-78754-973-9

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Article
Publication date: 13 April 2012

Jun Yang, Eric Zengxiang Wang and Yunbi An

The purpose of this paper is to study filer identities and voting outcomes of Canadian shareholder proposals and their impact on shareholders' wealth during the period…

Abstract

Purpose

The purpose of this paper is to study filer identities and voting outcomes of Canadian shareholder proposals and their impact on shareholders' wealth during the period from 2001 to 2008.

Design/methodology/approach

In total, 762 Canadian shareholder proposals and related information on targeted firms were collected from the Shareholder Association for Research and Education (SHARE) and the System for Electronic Document Analysis and Retrieval (SEDAR) databases. Statistical analyses are carried out on the features of shareholder proposals. Regression analyses are performed on voting outcomes, and an event study is conducted to test the impact of shareholder proposals on stock prices.

Findings

The authors' analyses show that proposals submitted by institutions or coordinated shareholder groups receive stronger support than those submitted by individuals and religious groups. Targeted firms are more willing and more likely to reach agreements with institutional investors, which in turn prompts activists to withdraw their proposals. The voting behavior of the Ontario Teachers' Pension Plan (OTPP) has a significant impact on voting outcomes. The targeted firms' stock prices respond substantially to news on proposals submitted by institutional and coordinated investors and proposals on social and environmental issues.

Originality/value

In addition to in‐depth analyses (issues, filers, voting outcomes, and impacts on stock price) of Canadian shareholder proposals, this paper explores the voting behaviour and impact of a large institutional shareholder that has been passive in filing shareholder proposals. Special attention is paid to Canadian features of shareholder activism, and differences between Canadian and US shareholder proposals are highlighted and discussed. The paper thus extends shareholder activism studies from focusing on open shareholder activists to investigating passive institutional shareholders.

Details

Managerial Finance, vol. 38 no. 5
Type: Research Article
ISSN: 0307-4358

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Book part
Publication date: 20 June 2003

Teresa A John and Gopala K Vasudevan

We examine voting outcomes on shareholder governance proposals that seek annual elections for all the directors on the corporate board. We relate these voting outcomes to…

Abstract

We examine voting outcomes on shareholder governance proposals that seek annual elections for all the directors on the corporate board. We relate these voting outcomes to different ownership structure characteristics and a series of variables that are publicly available. The pattern of support indicates that proposals are generally successful when they are supported by large activist groups and when institutions hold a significant fraction of shares outstanding. Our evidence casts some doubt on the efficacy of the Rule 14A-8 mechanism, which limits the amount of information that can be provided to shareholders as part of the proposal.

Details

Advances in Financial Economics
Type: Book
ISBN: 978-1-84950-214-6

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Article
Publication date: 23 January 2007

Luc Renneboog and Grzegorz Trojanowski

This paper seeks to examine whether or not divident policy is influenced by the firm's corporate control structure, investigating the relationship between the dynamics of…

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5287

Abstract

Purpose

This paper seeks to examine whether or not divident policy is influenced by the firm's corporate control structure, investigating the relationship between the dynamics of earnings payout and the voting power enjoyed by different types of shareholders. This allows one to test a set of hypotheses derived from agency and pecking order theories.

Design/methodology/approach

A large panel of UK firms for the 1990s and is analyzed that the payout policy is significantly related to control concentration. The problem of control measurement is addressed and the use of Banzhaf indices advocated as a relevant measure of voting power in the analysis of corporate policy choices. The traditional framework proposed by Linter is extended and an econometrically sound approach to modeling the dynamics of the total payout suggested. Where most – even recent – studies on payout policy show some methodological flaws, state‐of‐the‐art dynamic panel data estimation procedures are applied.

Findings

Expectedly, profitability is a crucial determinant of payout decisions, but the presence of strong block holders or block holder coalitions weakens the relationship between the corporate earnings and the payout dynamics. Block holders appear to realize that an overly generous payout may render the company liquidity constrained, and, consequently, result in suboptimal investment policy.

Practical implications

The results challenge some of the implications of the agency theories of payout, and favor a pecking‐order explanation for the observed patterns. The analysis of payout dynamics reveals also that companies adjust payout policies to changes in earnings only gradually, which is consistent with “dividend smoothing”. In fact, the results suggest a presence of a more general phenomenon of the “total payout smoothing”.

Originality/value

According to one's bet knowledge, this is the first study employing those game theory‐based concepts in the context of corporate payout policies.

Details

Managerial Finance, vol. 33 no. 1
Type: Research Article
ISSN: 0307-4358

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Book part
Publication date: 13 October 2017

Anne Lafarre

Blockholders can behave opportunistically because small shareholder voting suffers from coordination problems. In this chapter, we investigate the features of small…

Abstract

Blockholders can behave opportunistically because small shareholder voting suffers from coordination problems. In this chapter, we investigate the features of small shareholder voting using a theoretical framework. Specifically, we investigate when defeating a blockholder’s resolution is optional for shareholders. Regulatory initiatives that facilitate communication between small shareholders or focus on institutional investors and corporate governance tools that alter or add the threshold in the voting game also contribute to solving the coordination problem. These corporate governance initiatives can increase the relevance of AGMs in Europe.

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