Mitigating information imperfections in proxy contests: The effect of dissidents' proxy solicitation
Date of Original Version
This study examines dissidents' expenses related to proxy solicitation activities in a contested director election. I find that dissidents' solicitation expenses are associated with higher chances of winning board seats. This association is consistent with my conjecture that dissidents extend their efforts in proxy solicitation and thus persuade more shareholders in dissidents' favor, but this is not likely driven by retained solicitor's reputation, dissidents' opportunistic behavior for reimbursement, or other popular strategic activities in proxy contests. Furthermore, I show that proxy solicitation activities are considered to be an information channel that substitutes for investors' own search for proxy statements from the SEC's EDGAR. Overall, this study suggests that proxy solicitation plays an important role in proxy contests.
Journal of Corporate Finance
Lee, Choonsik. "Mitigating information imperfections in proxy contests: The effect of dissidents' proxy solicitation." Journal of Corporate Finance 69, (2021). doi:10.1016/j.jcorpfin.2021.102011.