First, the arguments begin by noting that, in Easterbrook and Fischel's now classic formulation, shareholders' residual interest in the corporation gives them “the right incentives. Lucian A Bebchuk, Alma Cohen & Scott Hirst, “The Agency Problems of Institutional Investors J Economic Perspectives 89. 23 See Ronald J Gilson & Jeffrey N Gordon, “The Rise of Agency Capitalism and the Role of Shareholder Activists in Making it Work J Applied Corporate finance 8.
Ignorance in Political Voting
More than twenty percent of the US population does not know that the earth revolves around the sun and not the other way around.37 Less than forty percent of Americans believe in the theory of evolution (the rest either do not believe in it or have no opinion). ).38 More than a third of Europeans and Americans believe . Stanford University Press, 2020) at 95–117 (in particular, evidence that government works better the further it is removed from voter influence); Michael X Delli Carpini & Scott Keeter, What Americans Know About Politics and Why It Matters (New Haven, CT: Yale University Press, 1996) at 135–77; Scott L Althaus, Collective Preferences in Democratic Politics: Opinion Surveys and the Will of the People (Cambridge, UK: Cambridge University Press, 2003); Rick Shenkman, How Stupid We Are. The first is that this ignorance is due to the individual's lack of influence over the outcome of the election; it does not depend on the importance of the final outcome of the election. This is obviously discouraging news for proponents of the view that better shareholder voting requires only more and cheaper information.
Irrationality in Political Voting
Professor Ilya Somin calls this behavior "enjoying the psychic benefits of being a political 'fan'."49 Sports fans spend time gathering information and following their team, not because of any expectation that they thereby influence the outcome of the season, but rather because they find it interesting and enjoy rooting for "their" team. For examples in political beliefs, see Steven M Smallpage, Adam M Enders & Joseph E Uscinski, "The Partisan Contours of Conspiracy Theory Beliefs Research & Politics 1 at 4. The whole dynamic is underpinned by the fact that "the market a 'user have fee' for irrationality, and democracy not."56.
In fact, one of the most common assumptions about voting patterns is that voters often cast their votes to further their own interest.57 "They vote for their pocketbooks" is a phrase at least as old as the time when pocketbooks existed - and was referred to. to as such. For example, research has found that there is little correlation between a person's income and their ideology or political party affiliation.59 Older Americans are no more likely to support Medicare than the young.60 Men are vulnerable to the draft . support it at the same rate as other sections of the population.61. Poorer parts of the country, especially the Rust Belt, Southeastern states and parts of the Midwest, vote Republican.62 One of the most famous books on this phenomenon.
59 See Andrew Gelman et al, “Rich State, Poor State, Red State, Blue State: What's the Matter with Connecticut QJ Political Science 345; Andrew Gelman, "Economic Divides and Political Polarization in Red and Blue America" (2011), online (pdf): Columbia University Department of Statistics
Steel Import Tariffs: Quantifying the Impact in 2002” (February 4, 2003), online (PDF): Trade Partnership Worldwide
The Empirical Literature around Shareholder Voting
The well-known story of the rise in shareholder voting power since the 1970s supports this picture of retrenchment. Luigi Zingales, "The Value of Voting Rights: A Study of the Milan Stock Exchange Experience rev. Financial Studies 125). See also Edwin Hu, Joshua Mitts & Haley Sylvester, "The Index-Fund Dilemma: An Empirical Study of the Lending-Voting Tradeoff" (2020) Columbia Law School Working Paper No 647 (demonstrating a preference by some types of institutional investors to lend shares rather than vote them).
89 For a discussion of the differences between these concepts of corporate governance, see Bryce C Tingle, “What is Corporate Governance. Tellingly, what does not seem to influence voting decisions regarding directors: competence, experience, board contributions and the company's underlying economic performance. IIRC Institute [perma.cc/R6AW-B8ZL]. only five percent of the 175 directors failed to obtain a "yes" majority. votes left the committee); Kahan & Rock, “Symbolic Corporate Governance,” supra note 117 at 2012 (when the board addresses any corporate governance deficiency that resulted in a vote against a director, the following year, shareholders re-elect the director by a clear majority).
As we have seen, directors are primarily targeted because of decisions by the board as a whole, such as those related to executive compensation, or the adoption of best corporate governance practices that are unlikely to improve performance. of the corporation. Contested director elections are usually conducted on the basis of the quality of corporate governance in the target firm. 159 For an assessment of various studies on the long-term outcomes of shareholder activism, see Tingle, “Two Stories,” supra note 22; Coffee et al, supra note 134 at 384, n 1.
This leads us to the second possible explanation for the importance given to corporate governance claims in contested elections: the error is not on the part of shareholders, but on the part of activist shareholders and incumbent boards. Harris finds that whether a board is regulated depends on the company's short-term stock return performance. 188 See Sandler & Hall, supra note 137 (“[t]he fact that companies seem largely insulated from these [governance] concerns at the time of the IPO again raises questions about the strength of the link between 'best practices "of corporate governance and shareholder value perceptions" in 3).
Revisiting the Academic Debate
It should be noted that by focusing on the marginal value of the vote itself, we can avoid lengthy evaluations of the different incentives and institutional characteristics of different types of shareholders.198 There is no. Jana advocated for the sale of certain business divisions (and the distribution of the resulting proceeds to the shareholders), while the board was determined that the relevant business lines were essential for the long-term success of the entire company.201 As usual, the quality of corporate governance at Agrium has become an issue, with Jana Partners that the board, as well as specific direct-. The ISS Proxy Paper questions the board's capital allocation and its commitment to total shareholder value and states that "the board now points out that Agrium's dividend yield is highly competitive among - though not superior to - peers also indicates a lack of urgency" (supra note 201) at 23).
The paper also casts doubt on the board's management of its retail business (see ibid at 25), argues that there are deficiencies in the competences of the existing board members (see ibid at 25-26), questions the board's strategy (see ibid at 26) ) , refers to the board as having "a burgeoning credibility problem" and wonders whether shareholders can trust the board going forward (ibid at 27). The paper further states that "the board has taken some questionable actions that raise questions about its credibility" (ibid at 30). See Ronald Barusch, "Dealpolitk: Agrium Lesson for Activists: Don't Underestimate the Adversary", The Wall Street Journal (June 17, 2013), online:
At the time of the conflict, several studies had been conducted looking at the performance of hybrid cards and found that their performance lagged behind their peers over long periods of time. the two years after the installation of the hybrid board.208 These were not obscure investigations either. 207 See Chris Cernich et al, "Effectiveness of Hybrid Boards" (May 2009) at 27, online (pdf): University of Delaware John L Weinberg Center for Corporate Governance
World Politics 323 (“the net effect of democracy on cross-national growth over the past five decades is negative or zero” at 323).