This week's installment of the POLECONUK Webinar series invites Professor Dimitrios Xefteris of Univeristy of Cyprus to discuss his paper "Voting in Shareholder Meetings" (w/ Laurent Bouton, Aniol Llorente-Saguer, Antonin Macé)

Registration is available via joining POLECOMUK's mailing list. We will send out to all registered users an email with details how to join the seminar about three hours before the event.

More information on the POLECONUK Webinar Series is available here.

 

Abstract:

This paper studies voting in shareholders meetings. We focus on the informational efficiency of different voting mechanisms, taking into account that they affect both management's incentives before the meeting and shareholders' decisions at the meeting. We first focus on the case in which the management does not affect the proposal being voted on. We prove that, for any distribution of shareholdings, the one-share-one-vote mechanism (1S1V) dominates the one-person-one-vote mechanism (1P1V), independently of whether or how shareholdings correlate with information accuracy. We also show that 1S1V becomes efficient only if votes are fully divisible. Second, we consider the case in which the management decides whether to put the proposal to a vote. The properties of a voting mechanism then depend both on its voting efficiency and on how it affects managers' incentives to select good proposals. We uncover a trade-off between selection and voting efficiency underlying the comparison of 1S1V and 1P1V: the higher voting efficiency of 1S1V implies worse selection incentives. In some cases, the negative effect of worse selection incentives on shareholders' welfare can be large enough to wash out the higher voting efficiency of 1S1V.