director nominations

We analyze the SEC’s proxy access rule and its impact on shareholder wealth focusing on firms’ governance characteristics. Firms with a high probability of being targeted have more negative returns while independent directors and non-cash compensation positively influence the market’s reaction. Smaller boards have less negative impact, suggesting the rule isn’t seen as value-enhancing by marginal shareholders.

We examine SEC’s director nomination rule’s wealth effects. Results contradict shareholder empowerment creating value: Abnormal returns are negative for events increasing passage probability.