CORPORATE GOVERNANCE AND SHAREHOLDER INITIATIVES - EMPIRICAL-EVIDENCE

Shareholder-initiated proxy proposals on corporate governance issues b ecame popular in the late 1980s as corporate takeover activity decline d. We find firms attracting governance proposals have poor prior perfo rmance, as measured by the market-to-book ratio, operating return, and sales growth. There is little evidence that operating returns improve after proposals. The proposals also have negligible effects on compan y share values and top management turnover. Even proposals that receiv e a majority of shareholder votes typically do not engender share pric e increases or discernible changes in firm policies.