Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Working Knowledge
Business Research for Business Leaders
  • Browse All Articles
  • Popular Articles
  • Cold Call Podcasts
  • About Us
  • Leadership
  • Marketing
  • Finance
  • Management
  • Entrepreneurship
  • All Topics...
  • Topics
    • COVID-19
    • Entrepreneurship
    • Finance
    • Gender
    • Globalization
    • Leadership
    • Management
    • Negotiation
    • Social Enterprise
    • Strategy
  • Sections
    • Book
    • Cold Call Podcast
    • HBS Case
    • In Practice
    • Lessons from the Classroom
    • Op-Ed
    • Research & Ideas
    • Research Event
    • Sharpening Your Skills
    • What Do You Think?
    • Working Paper Summaries
  • Browse All
    • COVID-19 Business Impact Center
      COVID-19 Business Impact Center
      Does Shareholder Proxy Access Improve Firm Value? Evidence from the Business Roundtable Challenge
      11 Jan 2011Working Paper Summaries

      Does Shareholder Proxy Access Improve Firm Value? Evidence from the Business Roundtable Challenge

      by Bo Becker, Daniel B. Bergstresser and Guhan Subramanian
      In August 2010, the Security and Exchange Commission announced a highly anticipated rule that would make it easier for investors to nominate new board members and get rid of existing ones. It allowed shareholders to have their board candidates included in the company's proxy materials--if those shareholders had owned at least 3 percent of the firm's shares for at least the prior three years. On October 4, the SEC unexpectedly and indefinitely postponed the implementation of that rule, pending the outcome of a lawsuit aimed at overturning it. This paper gauges the significance of the proxy access rule by measuring whether certain firms gained or lost market value on news of the delay. Research was conducted by Harvard Business School professors Bo Becker, Daniel Bergstresser, and Guhan Subramanian. Key concepts include:
      • Firms that would have been most affected by the proxy access rule, based on institutional ownership, lost value on October 4, 2010, following the news of the rule's delay. This suggests that financial markets placed positive value on shareholders' access to the board.
      • The loss in value was greatest at firms that had large positions held by activist investors.
      • The paper's findings may help prove that the SEC has met the federal rule mandating that all proposed rules "will promote efficiency, competition, and capital formation."
      LinkedIn
      Email

      Author Abstract

      We measure the value of shareholder proxy access by using a recent development in the ability of shareholders to nominate candidates for board seats. We use the SEC's October 4, 2010 announcement that it would significantly delay implementation of its August 2010 proxy access rule as a natural experiment. Because firms with substantial institutional ownership would have been most affected by the SEC's now-delayed changes, we use the share and composition of institutional investors to sort firms into those more and less affected by the October 4 news. Firms that would have been most affected by proxy access, as measured by institutional ownership, lost value on that day. The value drop was 55 basis points for a 10 percentage point change in activist institution ownership. These results suggest that financial markets placed a positive value on shareholder access, as implemented in the SEC's August 2010 rule.

      Paper Information

      • Full Working Paper Text
      • Working Paper Publication Date: November 2010
      • HBS Working Paper Number: 11-052
      • Faculty Unit(s): Finance; Negotiation, Organizations & Markets
          Trending
            • 29 Oct 2020
            • Research & Ideas

            The COVID Gender Gap: Why Fewer Women Are Dying

            • 13 Jul 2020
            • Research & Ideas

            Merck CEO Ken Frazier Discusses a COVID Cure, Racism, and Why Leaders Need to Walk the Talk

            • 25 Feb 2019
            • Research & Ideas

            How Gender Stereotypes Kill a Woman’s Self-Confidence

            • 19 Jan 2021
            • In Practice

            Leadership Advice for Biden: Restore a Sense of Calm

            • 01 Nov 2020
            • Research & Ideas

            Good Leadership Is an Act of Kindness

        Guhan Subramanian
        Guhan Subramanian
        H. Douglas Weaver Professor of Business Law, Joseph Flom Professor of Law and Business
        Contact
        Send an email
        → More Articles
        Find Related Articles
        • Personal Finance
        • Finance
        • Financial Services
        • North & Central America
        • United States

        Sign up for our weekly newsletter

        Interested in improving your business? Learn about fresh research and ideas from Harvard Business School faculty.
        ǁ
        Campus Map
        Harvard Business School Working Knowledge
        Baker Library | Bloomberg Center
        Soldiers Field
        Boston, MA 02163
        Email: Editor-in-Chief
        →Map & Directions
        →More Contact Information
        • Make a Gift
        • Site Map
        • Jobs
        • Harvard University
        • Trademarks
        • Policies
        • Digital Accessibility
        Copyright © President & Fellows of Harvard College