Retail Shareholder Participation in the Proxy Process: Monitoring, Engagement, and Voting
2019
We study retail shareholder voting using a detailed and nearly universal sample of anonymized
retail shareholder voting records over the period 2015-2017. Contrary to public perception, we
find that retail shareholders are an influential voting bloc, affecting as many proposal outcomes as
the Big Three asset management firms despite lower voting participation and less uniform
voting. Consistent with a monitoring role, retail voters are more likely to turn out for the securities
in their portfolio that have underperformed, for ballots that include contested proposals, and for
firms comprising the largest stakes in their portfolio. Retail shareholders with large stock portfolios
and low opportunity costs are most likely to turn out. In regards to retail voting decisions, we find
high sensitivity to recent poor performance, but far lower sensitivity to ISS recommendations than
that of large mutual funds. Retail shareholders can be divided into two blocs. The first are highly
influential large stakeholders, who turn out at high rates and strongly oppose shareholder
proposals. The second are the more populous small stakeholders, who turn out at lower rates and
show higher support for shareholder proposals. Retail shareholders are more influential at smaller
firms, where they hold a larger proportionate share, their turnout is higher, and their support for
management is lower. Our evidence provides support for the idea that retail shareholders can and
do utilize their voting power as a means to monitor firms and communicate with incumbent boards
and managements.
Keywords:
- Correction
- Source
- Cite
- Save
- Machine Reading By IdeaReader
11
References
5
Citations
NaN
KQI