Title
Do boards pay attention when institutional investor activists “just vote no”?
Document Type
Article
Publication Date
10-2008
Abstract
We examine “just vote no” campaigns, a recent innovation in low-cost shareholder activist tools whereby activists encourage their fellow shareholders to withhold votes toward a director's election to express dissatisfaction with management performance or the firm's corporate governance structure. Grundfest [1993. Just vote no: a minimalist strategy for dealing with barbarians inside the gates. Stanford Law Review 45, 857–937] argues that a substantial withheld vote motivates directors to take immediate action to avoid further embarrassment. We find a variety of supportive evidence, including operating performance improvements and abnormal disciplinary chief executive officer (CEO) turnover, indicating that such campaigns induce boards to take actions in shareholders’ interests. Furthermore, abnormal turnover is robust to controlling for concurrent events and firm- and CEO-specific controls.
Recommended Citation
Diane Del Guercio, Laura Seery, Tracie Woidtke, Do boards pay attention when institutional investor activists 'just vote no'?, Journal of Financial Economics, Volume 90, Issue 1, October 2008, Pages 84-103, ISSN 0304-405X, DOI: 10.1016/j.jfineco.2008.01.002. (http://www.sciencedirect.com/science/article/B6VBX-4T9M664-2/2/469bfbd3a00bf4c3c971b826ecf4eea2)