Corporate governance proposals and shareholder activism: the role of institutional investors

We study shareholder proposals across a period of substantial activity and find systematic differences both across sponsor identity and across time. T o measure the success of shareholder activism, we examine voting outcomes a nd short-term market reactions conditioned on proposal type and sponsor ide ntity. The voting analysis documents that sponsor identity, issue type, pri or performance and time period are important influences on the voting outco me. Proposals sponsored by institutions or coordinated groups appear to act as substitutes gaining substantially more support than proposals sponsored by individuals. The nature of the stock market reaction, while typically s mall, varies according to the issue and the sponsor identity. (C) 2000 Else vier Science S.A. All rights reserved. JEL classification: G34.