The Case for Limited Shareholder Voting Rights

Corporate Governance : Ethics and Legal Compliance, Risk Management, and Political Activities

“…Stephen Bainbridge, a prominent defender of the director-centric model, notes that shareholders are not committed to long-term viability and value, and are both largely apathetic and incompetent to serve those goals. Only a focused board of experts is equipped to make the right judgments (Bainbridge 2006a;Bainbridge 2006b). Lynne Stout (2012), also a strong critic of a short-term outlook and an even stronger supporter of stakeholder accountability, applauded the DuPont win over the model of short-term profit maximization, based on a perspective that embraces corporate social responsibility (Mordock 2015).…”

Executive Remuneration: Achieving Accountability through Disclosure

“…Several studies indicate that shareholder voting does not always relate to the remuneration resolution, and that shareholders can use the voting mechanism as a protest vote against other issues (Bainbridge, 2006;Monem & Ng, 2013;Yermack, 2010). To control for this potential protest vote, abnormal shareholder returns are included to capture issues unrelated to the remuneration report, as the market is expected to price all other information available in the market (Bugeja et al, 2016;Yermack, 2010).…”

“…In releasing specific details of what decisions were undertaken by executives in an attempt (successful or otherwise) to achieve firm performance, shareholders may not be sophisticated in the interpretation of that information (Bainbridge, 2006). Incorrect interpretation of information may result in unintended or biased market wide opinion, impacting on cost of capital or in the Australian setting, attracting strikes against the remuneration report.…”

“…Specifically, the models are estimated with remuneration measured as: the cash salary as a percentage of total reported pay following and Bugeja et al (2016); total reported CEO remuneration scaled by total assets following ; and the reported categorised elements of remuneration (cash, short-term incentive payment and long-term incentive payment) following Clarkson et al (2011) and Kimbro and Xu (2015). An alternate measure for performance, ROE, is estimated following Clarkson et al (1999;2006); and firm size is measured using book value of equity and the natural log of market capitalisation (Lang & Lundholm, 1993;Clarkson et al, 2013;Etimur et al, 2013). All regressions are estimated using dummy variables for industry membership.…”

“…knowledge held by shareholders (Bainbridge, 2006), and there are contradictory indications in the literature as to the drivers of shareholders voting behaviour (Monem & Ng, 2013;Alissa, 2015). Bugeja et al (2016) find that since the introduction of the two-strikes rule, the level of CEO pay appears to be a significant driver of strikes in Australia, a finding that is supported by research conducted in the UK setting (Kimbro & Xu, 2016;Alissa, 2015).…”