Download This PaperWhen Shareholders Disagree: Trading After Shareholder Meetings
Forthcoming in the Review of Financial Studies
Fifth Annual Conference on Financial Market Regulation
European Corporate Governance Institute (ECGI) - Finance Working Paper No. 594/2019
79 Pages Posted: 31 Jan 2021 Last revised: 2 Apr 2021
Date Written: March 25, 2021
Abstract
This paper analyzes how trading after shareholder meetings changes the composition of the shareholder base. Analyzing daily trades, we find that mutual funds reduce their holdings if their votes are opposed to the voting outcome. Trading volume is high even when stock prices do not change, peaks on the meeting date, and remains high up to four weeks after shareholder meetings. The results support models based on differences of opinion, which predict that shareholders’ beliefs may diverge more after observing voting outcomes. Hence, trading after meetings creates a more homogeneous shareholder base, which has important implications for corporate governance.
Keywords: Shareholder Meetings, Voting, Disagreement, Trading, Volume
JEL Classification: G11, G12, G14, G30, G40
Suggested Citation: Suggested Citation
European Corporate Governance Institute (ECGI)
c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium
ECGI (European Corporate Governance Institute) ( email )
c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium