Shareholder Voting: Hiding the Good, the Bad and the Ugly

Practicalities

Abstract

Shareholder voting is considered a pivotal feature of corporate governance. It has been analysed from many different angles and perspectives. Yet corporate governance studies have not yet systematically explored how different shareholder classes, including retail shareholders and other non-institutional investors engage in voting. I remedy this deficiency, making three principal contributions. First, I hand-collected how over 70.000 shareholders voted more than 550.000 times their voting shares for more than 220 agenda items of 30 general meetings of three major Italian companies, members of the principal MIB index from 2017 to 2026 and unveil which shareholder classes participate in AGMs and with which voting stakes. Second, I reveal how voting results hide or wipe out divergent signals of a large majority of the shareholders. Third, I analyse when and how different shareholder classes vote for or against board proposals and support or disapprove of the strategic decision takings of the company. The result casts new light on the debate of the division of powers between the board and the shareholders as well as of the adequacy of the commonly used shareholder voting mechanism.