Public Versus Private Provision of Governance: The Case of Proxy Access
We use a unique setting to study the efficiencies and frictions in pursuing governance changes through private market channels. Recent regulatory changes made it possible to pursue proxy access at individual firms through shareholder proposals. We document a large wave of such proposals, and identify a 0.5 percent increase in shareholder value for targeted firms. However, we find that proponents do not selectively target the firms that the market expected to benefit most from a rule that would have mandated proxy access universally, and that management is more likely to challenge proposals at firms that stand to benefit more.