Who Withdraws Shareholder Proposals and Does It Matter?

The paper on withdrawn shareholder proposals by Rob Bauer, Frank Moers, and Michael Viehs has been accepted for publication in Corporate Governance: An International Review. The paper is now available on the journal's website.

In this paper, the authors study more than 12,000 shareholder proposals that were filed to S&P1500 companies from 1997 to 2009, and investigate the determinants of proposal withdrawal by the sponsoring shareholder. They also study the effectiveness of withdrawn proposals as a corporate governance device. Bauer, Moers, and Viehs find that proposals filed by influential investors are more likely to be withdrawn than proposals filed by private investors. Their empirical results show that institutional ownership (in particular by long-term, passively investing institutions) is positively related to the likelihood of a proposal’s withdrawal if the sponsoring shareholder is an institutional investor. They also document a negative relation between CEOownership and the likelihood ofwithdrawal. This effect is most pronounced for corporate governance proposals. The authors also show that withdrawn proposals on executive compensation change subsequent corporate pay practices.