DBJ Discussion Paper Series, No. 2003

The Distribution of Voting Rights to Shareholders

Vyacheslav Fos（Boston College）
Clifford G. Holderness（Boston College）

February 2021

Discussion Papers are a series of preliminary materials in their draft form. No quotations,reproductions or circulations should be made without the written consent of the authors in order toprotect the tentative characters of these papers. Any opinions, findings, conclusions or
recommendations expressed in these papers are those of the authors and do not reflect the views of
the Institute.

The Distribution of Voting Rights to Shareholders

Vyacheslav Fos(Boston College)
Clifford G. Holderness(Boston College)

February 9, 2021

The aim of this discussion paper series is to stimulate discussion and comment fromacademics and policymakers through a preliminary draft form. This paper is included bypermission of the author(s) as a tentative material before publication in peer-reviewed
journals or books. Copyright and all related rights are maintained by the author(s). Views
expressed in this paper are those of the author(s) and do not reflect the views of the
Research Institute of Capital Formation or Development Bank of Japan.

The Distribution of Voting Rights to Shareholders

Vyacheslav Fos
Clifford G. Holderness*
February 10, 2021
This is the first comprehensive study of the distribution of voting rights toshareholders. Only those owning stock on the record date may vote. Firms, however,reveal that date after the fact 91% of the time. With controversial votes, firms are
more likely to do the opposite, and this is associated with a lower passage rate forshareholder-initiated proposals. The NYSE sells non-public record-date information
to select investors. When stocks go ex vote, prices decline, suggesting that investors
buy marginal votes. When stocks go ex vote with controversial votes, prices decline
markedly and trading volume surges immediately thereafter.

(JEL G14, G30, G35)
Keywords: Shareholder voting, ex day, record date, corporate governance.

* Boston College, Carroll School of Management, (fos@bc.edu and clifford.holderness@bc.edu).

We thank Christopher Carpenter and Thomas Schneider for research assistance. This paper has
benefited from the comments of James Dow, Alex Edmans, Nadya Malenko, Jeffrey Pontiff, Philip
Strahan, and seminar participants at Boston College, the Chinese University of Hong Kong, Fudan
University, London Business School, the PBC School of Finance at Tsinghua University, and the
School of Economics and Management at Tsinghua University. This project also benefited from thevisiting scholar program of the Research Institute of Capital Formation at the Development Bank ofJapan.

This is the first comprehensive study of the distribution of voting rights toshareholders. The neglect of how investors are notified of the voting record date andwhat happens when stocks go from cum vote to ex vote is surprising on several
accounts. First, the right to vote is one of only three distributions made toshareholders. The other two distributions, cash dividends and rights offers, havebeen studied for years, with well in excess of 100 papers studying ex day changes
with cash dividends alone.1 Moreover, the most common of the three distributions
for most firms is the right to vote. Finally, voting is central to how shareholders
control agency costs and influence key corporate decisions.2 It would be surprising if
an integral part of this process, the distribution of voting rights to shareholders, is
as unimportant as its neglect in the academic literature might suggest.
In this study of over 100,000 distributions of voting rights to shareholders, wefind a wide array of evidence that firms and stock exchanges change when they
notify investors of the voting record date based on the proposals involved. Trading
volume is higher than normal both before and immediately after the record date.
Stock prices decline significantly when they go from cum vote to ex vote. Thesechanges in notification, trading volume, and stock prices are correlated both withhow controversial votes are and how they ultimately turn out. In summary, ourhighest-level finding is that distribution of voting rights to shareholders matters.
We now summarize in more detail our major empirical findings and explain
their importance.
First, we find that disclosure of the voting record date is correlated with thetype of proposal and whether it ultimately passes. Only those who own stock on therecord date are eligible to vote. Thus, in order to become a shareholder of record and1 Elton et al (2003). Elton and Gruber (1970) were the first to study stock price changes withcash dividends. Dolley (1934), in an important precursor to the modern event study methodology,
was the first to study what happens when stocks go ex rights.
2 Yermack (2010) reviews the role shareholder voting plays with corporate governance ingeneral. Studies of the impact of shareholder voting on specific corporate decisions include: Li, Liu,and Wu (2018) (mergers and acquisitions); Holderness (2018) (stock issuances); Fos, Li, andTsoutsoura (2018) (CEO turnover); Cai and Walkling (2011) (executive compensation).

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have the right to vote at a forthcoming meeting, an investor needs to purchase stock
before the voting record date while it is still cum vote. With 91% of the votes,
however, firms announce the record date after that date has passed. Consequently,
in contrast to distributions of cash dividends and rights offers, a significant fractionof shareholders, including some sophisticated investors, are unaware that a
distribution of votes has taken place. With controversial votes, the record date ismore likely to be announced before it occurs. This change in timing is associatedwith a significant decline in the passage rate for shareholder-initiated proposals.
These findings identify a new avenue to influence the outcome of shareholder
voting. Li and Yermack (2016) document that managers move annual shareholder
meetings to be a greater distance from corporate headquarters to discourage
scrutiny by shareholders when the managers have private, adverse information
about future firm performance. Bach and Metzger (2019) show how firms use accessto precise information about preliminary voting results to shape voting results intheir favor. Bebchuk and Kamar (2010) document that management often bundle
proposals for staggered boards, which shareholders are likely to oppose, withproposals for mergers, which shareholders are likely to support. Dimitrov and Jain
(2001) and Baginski et al (2014) report that firms are more likely to release positive
news as opposed to negative news when shareholders are voting. We find that whenthe voting record date is announced is correlated with changes in stock prices,trading volume, the closeness of votes, and the passage rate of proposals. The
existing literature, to the extent it considers the issue, assumes that release of thevoting record date does not vary and does not matter.
Two recent working papers, Levit, Malenko, and Maug (2020a, 2020b), study
models of shareholder governance. In these models, shareholders trade while astock is still cum vote and that this can affect voting outcomes. Our evidence
confirms that such trading often occurs, especially before controversial votes. At thesame time, our evidence also shows that not all shareholders are equally informed
about the record date. This factor has not (to the best of our knowledge) been
considered in the theoretical literature. Trading between informed and uninformed

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investors around the voting record date is likely to have significant effects of voting
dynamics.
Second, the New York Stock Exchange (“NYSE”) requires that firms reportforthcoming voting record dates as part of its “self-regulation” initiative. The
Exchange then sells this information to investors, typically before the record dateand before the public learns the date. These private sales of non-public information,
which include other potentially valuable information, are studied here for the firsttime.
If knowledge of a voting record date is material information, these sales would
seem to conflict with a fundamental principle of federal securities laws, namely that
all investors should have equal access to material information. An accepted
definition of material information is information that causes some people to change
their behavior. We thus investigate whether stock trading volume and prices
change around the voting record date. If they do, it would signify that investorschange their behavior in response to the setting of a voting record date and thatknowledge of a voting record date can be material information.
Our third key contribution is to document broad evidence of vote trading in the
spot market around the record day. Trading volume is higher than normal before
stocks go ex vote. It then declines around the record date itself, apparently becauseof uncertainties on when trades clear and sellers thus lose the right to vote. Oncestocks have clearly gone ex vote, sometimes there is an immediate surge in tradingeven though the outcome of the vote has yet to be determined. This trading activity
is most pronounced when the forthcoming vote is likely to be contentious. Thesefindings raise the possibility that some voting shareholders may be motivated moreby securing private benefits than by increasing firm value, a scenario which has yet
to be addressed in the literature.
These findings stand in contrast to the one paper that documents trading
volume when stocks go ex vote, Christoffersen et al (2007). They do not disaggregate
their sample into those observations where the marginal vote is likely to matter. As

4a result, they “find no sign of vote trading in the spot market.”3 In contrast, once wedisaggregate distributions by whether they are likely to be contentious, we findconsiderable evidence of vote trading in the spot market. This is one of many
instances where we find it is important to disaggregate distributions of voting
rights to shareholders.
Finally, in a seminal paper that was one of the first to question the thenconventional wisdom that shareholder voting was so ineffective that it should be
abolished, Manne (1962) called for a comprehensive study to quantify what happens
to stock prices when they go ex vote. Surprisingly (especially given the many papers
documenting what happens to stock prices when they go ex dividend), ours is thefirst paper to conduct such a study. On average stock prices decline by nine basis
points when they go ex vote but considerably more with votes that are expected to
be close and impact firm value. For example, the ex day decline averages 66 basis
points when proposals by dissident shareholders are involved. We identify instances
when stock prices decline by more than 5% when they go ex vote. We interpret thesedeclines as reflecting activist investors accumulating marginal votes for the next
shareholders’ meeting.
The paper is organized as follows. We start by studying two recent distributionsof voting rights that involved contentious issues for shareholders to decide. These
two cases reveal several novel issues that can arise when voting rights are
distributed to shareholders, and they motivate many of our subsequent empiricalanalyses. We also summarize the limited literature that addresses the distributionof votes to shareholders. We then turn to our empirical investigations which involve
more than 100,000 distributions of voting rights between 1996 and 2018 (inclusive).
We first investigate how and when investors are notified by firms and stock
exchanges of the voting record date. Next, we document what happens to trading
volume and stock prices when stocks go from cum vote to ex vote. Lastly, we discuss
the implications of our empirical findings for influencing the outcome of shareholder

3 Christoffersen et al (2007) p. 2927.

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voting, the price of a marginal vote, and the underlying dynamics of corporate
voting. In all of these areas, we raise policy questions and identify promisingavenues for future research.
I.

Distributions of Two Contentious Votes and Literature Review
Because to date there have been no systematic studies of the distribution of

votes to shareholders, to identify issues for our empirical investigations we start bystudying the distributions of two contentious votes, one involving a proxy contest at
DuPont in 2015 and the other a going-private proposal at AmTrust in 2018. We
then discuss what, if anything, the existing literature has to say about the issues
identified by these two cases.
A. DuPont Proxy Contest
In 2015 Nelson Peltz and three colleagues from Trian Fund Management ran
for the 12-person board at the DuPont Corporation, the fourth largest chemicalcompany in the world at the time. DuPont’s management strenuously opposed theirelection. During this proxy contest, Trian spent $8 million with 175 people
contacting shareholders, while DuPont spent $15 million with 200 people contacting
shareholders. Even small retail shareholders were personally contacted by the
opposing parties in what quickly became an intense battle for shareholder support.
On May 13, 2015 DuPont announced that all four of Trian’s nominees had been
defeated as had the proposal to repeal recent changes to DuPont’s bylaws. Nelson
Peltz himself received 46% of the votes cast. If any of DuPont’s three largest
shareholders had changed their vote, Peltz would have been elected (although not
his colleagues). Large institutional shareholders voted differently.4 There was
speculation in the financial press that small retail investors, who held about a thirdof DuPont’s stock, voted heavily for management.5
Key events as well as the trading volume and stock returns around the
distribution of the votes for this proxy contest are reported in Table 1. There are
4 The News Journal, September 2, 2015, “Large investor vote varied in DuPont proxy war.”
5 Wall Street Journal, May 7, 2015, “DuPont’s Swing Voter: The Small Investor.

6

several initially perplexing aspects on the timing of these events. Most notably, theinitial public announcement of the March 17 voting record date came through a
proxy filed on March 23. This retroactive announcement would seem to haveprecluded investors from purchasing additional shares to influence the outcome ofthe vote, so there should have been no change in trading volume or stock prices
around the already-passed voting record date. To the contrary, there weresignificant changes in both. Moreover, many of these changes occurred not on the
day academic research generally identifies as the effective ex vote day (March 13),which is two trading days before the record date to give stock trades time to clear(more on this timing below), but over the following two trading days.
The NYSE, where DuPont was listed at the time, requires that firms notify the
Exchange at least ten days before any distribution to shareholders. DuPont so
notified the Exchange, but because this is a self-regulatory requirement, theExchange is not obligated to release this information. The Exchange, however, sells
this information through its Corporate Actions Reports (the NYSE Group Proxy
Meeting File), a subscription-based service which has been criticized for its highprices.6 On March 6, the Exchange notified its subscribers of the March 17 record
for DuPont, but it did not notify the public at large. Table 1 shows that daily trading
volume in DuPont stock doubled on the date the Exchange notified its subscribers(March 6) and remained abnormally high through the record date. DuPont’s stock
returns were also abnormally high for several days starting on March 6.
The record date for determining who could vote was set by DuPont to be March
17. That is, only those who held title to DuPont stock at the close of exchange
trading on March 17 would be eligible to vote on Trian’s proposals. Stock trades,
however, do not clear instantaneously. At the time, the SEC had a T+3 rule (it has

6 “Is NYSE’s Corporate Actions Monopoly Broken by ‘Disruptive Data Vendor?” Forbes,
September 18, 2017. Exchange Data International, a London-based vendor, has launched a service
that will cost less than half of what the NYSE charges. It is not immediately clear how suchcompetitors to the NYSE will obtain voting record date information, at least before it is announced ina proxy. Firms release this information to the NYSE, and we presume that the information is thenproprietary to the NYSE. Resale of this information by third parties could raise legal concerns.

7since moved to a T+2 rule), which requires that all stock trades clear within three
trading days. Thus, someone buying DuPont stock on March 12 (three trading days
before the record date) and holding the stock until after the record date would haveeffectively been guaranteed the right to vote in the proxy contest. This is why
academic research typically designates the effective day a stock goes ex vote to be
two trading days before the record date, or in this case March 13. But could
someone who sold DuPont stock on March 13 still have voted on Trian’s proposals?
Practitioners tell us and academic research confirms that how quickly trades clear,that is how quickly title passes, varies with a number of factors involving the seller,
the buyer, the firm, and market conditions at the time.7 Accordingly, it is hard to
predict exactly when a given trade will clear other than it will clear within three
trading days. Consequently, someone who sold DuPont stock on March 13 could
have lost the right to vote if the sale happened to clear before the close of trading on
the record date of March 17. We believe this uncertainty, combined with the factthat stock exchanges do not set explicit an ex day with the distribution of votes,
explains why the reaction for both the trading volume and stock returns occurs noton March 13 but over the following two days.
DuPont’s raw stock price declined by $5.82 (untabulated) or approximately 8%(adjusted for market changes) over the day before the record day and the recordday. (For most empirical analyses, we use a three-day window starting at Day –2.
DuPont’s abnormal return for this window was –7.46%.) Because the cash flows
would be the same whether someone bought DuPont stock cum vote or ex vote, theex day stock price decline represents the price investors were willing to pay for an
additional or marginal vote for the shareholders’ meeting which would determine
the fate of Trian’s proposals.
Trading volume around the ex day is also notable. The increase in trading
volume before DuPont’s stock went ex vote seems to reflect investors accumulatingstock to influence the outcome of the proxy contest. The increase in trading volume

7 Angel (1998), Hasbrouck et al (1993).

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immediately after DuPont’s stock went ex vote is more challenging to understand. If
both sides believed that their approach would maximize firm value, it is unclear
why trading volume would increase before the outcome of the vote was determined,
which in this case would be weeks later at the annual meeting.
In contrast to the pronounced changes around the ex vote day, there were few
changes in either the stock returns or trading volume when DuPont filed a(definitive) proxy statement on March 23, which was the first announcement of therecord date to the public at large.8 The announcement of the outcome of the vote on
May 13 was associated with an abnormal return of almost –7% and a significant
increase in trading volume (untabulated).9
B. AmTrust Going Private Vote
In 2018 the chief executive officer and majority shareholder of AmTrust
Financial Services (“AmTrust”), a provider of insurance services in the specialty
property and casualty markets, proposed to take his company private. This proposal
needed the approval of a majority of the minority shareholders, many of whomcomplained that the going-private offer was too low.
On April 9 AmTrust’s management filed a preliminary proxy detailing its goingprivate proposal with an offer price of $13.50 (Table 2). As is the case withpreliminary proxies, the record date for determining which shareholders could voteon the going-private proposal was left blank.
On April 26 the activist investor Carl Icahn secretly began to accumulate
AmTrust stock. By May 7 he had accumulated 5% of the stock. On May 17 Icahn

8 There was no mention of a voting record date in a DuPont press release on January 8; a
DuPont letter to shareholders on February 17; a Trian press release on February 5; or in a Trianletter to shareholders on February 11.
9 After his defeat, Peltz predicted that DuPont would continue to miss its own performancetargets. This turned out to be the case. Ellen Kullman resigned as CEO in November 2015. The
following month DuPont agreed to merge with Dow. The merger resulted in the separation of the
major businesses, something that Peltz had originally sought.

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revealed this activity by filing an initial 13D, at which time he owned 9.4% of
AmTrust’s stock (or 17% of the stock needed to approve the going private proposal).
AmTrust’s board, however, had set the voting record date to be April 5 but did
not publicly announce that date until it filed a definitive proxy on May 4. When thecompany filed its preliminary proxy on April 9 it left the record date blank eventhough the company had already set the record date of April 5 because Delawarelaw (where it was incorporated) prohibits boards from setting record dates
retroactively.10 Consequently, all of Icahn’s stock purchases occurred after therecord date and thus could not be voted on the going-private proposal. Icahn filed alawsuit against AmTrust’s management alleging that he and the other “plaintiffs
bought many of its shares after April 6 but before May 4, 2018, thus purchasing
shares that they could not have known lacked voting rights.”11 AmTrust’s
management responded that it had “complied with all applicable rules in setting
and disclosing the record date.”12
The shareholders’ meeting at AmTrust was postponed, but the voting record
date remained April 5. Management increased the offer price to $14.75. Eventually,
the going-private proposal received the support of 67.4% of the minority
shareholders plus Icahn, who had no votes to cast in the matter because all of his
stock was purchased ex vote. The going-private transaction closed in November
2018.
C. Literature Review
There are no existing papers that focus on the distribution of votes toshareholders and only a handful of papers that touch in passing on some of theissues raised by the two preceding cases. Consider what is perhaps the most obvious
question: What happens to stock prices when they go from cum vote to ex vote?

10 8 Del. C. 1953, §213.
11 Icahn et al v. Barry D. Zyskind et al, Verified Complaint filed on May 21, 2018 in the Court ofChancery of the State of Delaware ¶28.

12 Wall Street Journal, June 5, 2018, “AmTrust delays Going-Private Vote—Firm to meet with
Icahn as count shows backing from minority holders falls short.”

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Elton et al (2003) report there are over 100 papers studying what happens to stock
prices when they go ex with cash dividends. But there are no papers focusing on
what happens to stock prices with the other major distribution to shareholders,
votes. We are aware of only three papers that purport to findings on what happens
to stock prices when they go ex vote, albeit the focus of all three papers is on proxycontests and not on the distribution of votes per se: Dodd and Warner (1983), Goshet al (1992), and Huang (2005). Unfortunately, all three papers measure stock pricechanges immediately after the voting record day. By this day, however, the stocks
had already been ex vote for several days, so the papers are not measuring the pricechange as a stock goes from cum vote to ex vote.13
In contrast, the literature that measures what happens to stock prices when
they go ex cash dividend understands that the relevant date is not the record datebut the ex dividend date. The two are never the same because of the time needed forstock trades to clear (with the difference varying with the settlement rules at thetime). To cite one example, during the proxy contest DuPont announced a cash
dividend with a record date of May 15 and an effective ex date of May 13. Thus, tomeasure what happens when DuPont’s stock went ex dividend, that is to measure
the after-tax value of DuPont’s dividend, one would measure the stock price change
from May 12 (when it was cum vote) to May 13 (when it started to trade ex vote).
The change in stock price from the record date of May 15 to the next trading day of
May 18 does not reflect the value of the dividend. Research on cash dividends has
13 Although Dodd and Warner (1983) focus their interpretation on the stock price change

following the voting record day, among the three papers they are the only one to report returns forthe period before the record day. They report the cumulative returns for Days –4 though 0 (inclusive,
where Day 0 is the voting record day), although not the returns for the individual days within thatwindow. Their sampling period was July 1, 1962 to January 31, 1978. From 1952 until 1968,
financial markets in the United States operated under a T+4 rule. In 1968, markets switched to a
T+5 rule. Approximately half of Dodd and Warner’s 89 observations occurred under the firstsettlement regime and approximately half under the second regime. Thus, the stocks they werestudying effectively went ex vote (or started going ex vote) not on Day +1, as they assume, but either
on Day –4 or Day –3 depending on the year. Moreover, they divide their sample by whether therecord date precedes or follows the announcement of the proxy contest. They do not consider whether
the record date precedes or follows the announcement of the record date itself, be it through thefiling of a proxy or a stock exchange data subscription service (if such a service existed at the time).

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been facilitated by the fact that stock exchanges set an effective ex day with cash
dividends.14 Exchanges do not do this with voting rights. As Table 1 shows with
DuPont, this can create uncertainty on when stocks go ex vote. Therefore, to capture
the full value of the vote, an event window of more than one day is needed. We use athree-day window beginning two days before the record day.
Even though voting is central to how shareholders influence corporate policy
and control agency costs, the literature to date has also paid little attention to how
investors learn the record date and thus know whether any stock they purchase will
have voting rights for the next shareholders’ meeting. No paper, to the best of ourknowledge, has identified that the NYSE sells non-public information including thevoting record date to select investors, typically (as we shall see) before the dateoccurs and before the public at large learns of the date through the filing of a proxy.
DuPont suggests that these Exchange information sales can impact stock prices andtrading volume.
Two papers, Young et al (1993) and Bethel et al (2009), address the relation
between the proxy filing date, which is how the public at large learns of the voting
record date, and the date itself. Both papers assert without empirical support thatproxies are always filed after the record date. Our evidence will show this is not thecase. We will analyze whether the timing of these proxy filings is associated withchanges in stock prices, trading volume, and voting outcomes.
Some commentators claim that the experience at AmTrust, where management
failed to report the voting record date in a preliminary proxy even though the board
by this time had set the already-passed record date, “happens all the time—record
date playing.”15 We will investigate whether this in fact is the case.
14 NYSE Rule 204. A further indication of the problems that can arise with the uncertainty overwhen trades clear is the fact that the NYSE has special listing rules governing cash dividends thatare for more than 25% of a firm’s stock price. Nasdaq also establishes an explicit ex-dividend datesoon after it is notified by a firm of the dividend record date. Such notification may be no later thanten calendar days prior to the record date. Nasdaq Listing Rule 5250(e)(6).
15 Bloomberg News Service, May 22, 2018, “Carl Icahn Didn’t Buy Some Shares on Time,”(quoting Steven Davidoff Solomon, a University of California, Berkeley law professor and former
securities attorney).

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The only paper to document what happens to trading volume when stocks go ex
vote is Christoffersen’s et al (2007) study of using borrowed stock to influenceshareholder votes. They fail, however, to disaggregate votes and as a consequencefind no change in aggregate stock trading when stocks go ex vote. This leads themto conclude that there is not a market for votes in what they call the spot market.
When we disaggregate, we find that with some types of votes there is an active
market for votes before stocks go ex vote. DuPont is an example.
The working assumption in the literature is that trading volume will increase
only when the outcome of a controversial vote is revealed, which will in most cases
be at the annual meeting (Li et al 2019). While this did happen with DuPont(untabulated), Table 1 shows that there can also be a surge in trading immediately
after a stock has gone ex vote. This raises the interesting question of why someshareholders sell as soon as they have voted but before the outcome of the vote has
been determined.
In general, we have been struck by the widespread attention paid in theliterature to one distribution to shareholders, namely cash dividends, comparedwith the near-total lack of attention paid to the other major distribution toshareholders, voting rights. Both can be important. For example, during 2015,
DuPont paid cash dividends totaling $1.72, while the ex vote day decline in stock
price, the price of a marginal vote for the shareholder’s meeting to decide on Trian’s
proposals, was $5.82.
Table 3, which incorporates some of our forthcoming findings, highlights
similarities and differences between the distribution of cash dividends versus the
distribution of votes. A partial explanation for the neglect in the literature of the
distribution of votes might be that although most firms do not pay cash dividends,
any cash dividend is by definition a significant event. In contrast, while all firms
distribute votes at least once a year, many of these distributions are insignificant.
This would be the case when the matters for shareholders to vote upon will not
impact firm value; or if they will impact firm value they will not be close votes; or ifthey will both impact firm value and be close they will be decided by the votes of

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buy-and-hold shareholders, not activist investors. But there will be times, as with
DuPont and possibly AmTrust, when activist shareholders accumulate additional or
marginal votes while a stock is still cum vote to garner additional influence over an
important forthcoming vote. Our goal in this paper is to determine how often thishappens and what the effects are.
II. Data
Public corporations must file a public proxy statement with the Securities andExchange Commission before holding a shareholder vote. The final or definitive
version of that proxy statement must identify the record date for determining who
may vote on the proposals contained in the proxy statement. Only those who holdtitle to the stock on the close of trading on the record date may vote on the proposals
in the proxy statement.
To investigate what happens when voting rights are distributed toshareholders, we started by collecting all proxy statements (preliminary anddefinitive) filed on the SEC’s EDGAR electronic portal between 1996 and 2018
(inclusive). We then used a script search to identify those proxy filings containing
all of the filing, record, and shareholder meeting dates. Using this approach, wewere able to identify 114,368 proxy record dates. In about 7% of the firm-years, afirm had more than one shareholder meeting; we include proxies from these special
meetings in our database.
We merged this sample with the Center for Research in Security Prices’s(CRSP) database to obtain trading volume and stock prices and for 101,141 proxyvoting record dates involving 12,549 different corporations. Some of our analyses
focus on trading activity and stock prices as stocks go from cum vote to ex vote. We
measure trading activity as the daily trading volume in a company’s stock divided
by the number of shares outstanding. We measure stock returns using the FamaFrench three-factor model, which is estimated from 360 days through 60 days before
the record date.

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III. Empirical Findings
In this section we present the empirical findings using our full sample. We firstinvestigate how and when investors are notified of the voting record date. We thenexamine what happens to trading volume and stock prices when stocks go from cum
vote to ex vote.
A. Notification of the Voting Record Date to Investors
One might think that all investors would learn of a voting record date at thesame time and before that date occurs. Cash dividends, the other major distribution
to shareholders, are announced to the public at large well before the record date.
This gives investors the opportunity to trade to either secure or avoid cash
dividends (perhaps for tax reasons). Similarly, pre-announcement of the record date
for the distribution of votes would give investors the opportunity to buy more shares
if they want additional influence over a forthcoming vote, or if they want to sellshares because they lack the expertise needed to make an informed decision.
Moreover, equal access for all investors to material information is a cornerstone offederal securities laws. Regulation Fair Disclosure (Reg FD), for example, prevents
public corporations from selectively disclosing material information to market
professionals and favored shareholders. Similarly, long-standing prohibitions on
insider trading can broadly be viewed as an effort to prevent individuals fromtrading on information that others lack. In fact, neither pre-release of the record
date nor release of the record date to all investors at the same time is typical withshareholder voting.
Proxy Dates. Under federal securities law, firms must file a definitive proxy
before each shareholder vote, and that proxy must identify the record date fordetermining which shareholders may vote on the proposals contained in the proxy.
This is the first identification of the voting record date to a firm’s shareholders andthe public at large. We randomly checked for whether firms announce voting record
dates in press releases (as they do with cash dividends) or other filings but found noevidence along these lines. To be sure, firms sometimes file preliminary proxystatements, but, as with AmTrust, these do not identify the voting record date.

15

Panel A of Table 4 reports that 91% of all of our sample proxies that initially
identify the voting record date are filed after that date.16 Thus, claims thatdefinitive proxies are always filed after the record date are incorrect (Young et al
1993, Bethel et al 2009). The question becomes whether the timing of the filing ofproxies is random or strategic and whether the timing of the filing is correlated withoutcomes of interest, such as the stock price reaction when stocks go ex vote orwhether the proposals ultimately pass.
One possibility is that firms simply randomly decide whether to file the(definitive) proxy statement before or after the record date. If this were the case,approximately half of all proxies would be filed before the record date and half
would be filed after the record date. Given the lop-sided data in Panel A of Table 4,
we can easily reject this random hypothesis.
Another possibility is that firms put little thought into the initial choice
between filing a proxy before or after the record date, perhaps reflecting thedecision of a low-level employee, but once that choice is made firms stay with it overtime. To address this path-dependency argument, we divide our firms with at least
two proxy statements into three categories: firms that always file before the record
date; firms that always file after the record date; and firms that have done both. We
find that 42% of these firms have both early and late filings. Less than 1% of thefirms always notify shareholders of the record date before it occurs (untabulated).
Some readers have suggested that notification of the voting record date throughthe filing of a proxy might be superfluous if investors can accurately predict future

16 For most of our sampling period, investors needed more than two days’ notice before therecord date to be assured that any stock they purchased would clear and could thus be voted in theforthcoming meeting. Notification three trading before the record date would have been sufficient toachieve this if the notification came sufficiently early in the day. Throughout the paper we classify
proxies filed at least four trading days before the record date as being filed before the record datewith all other proxies classified as being filed after the record date. We also adjust for the movement
to a T+2 clearance for stock trades beginning on September 5, 2017. With these observations, weclassify proxy statements made at least three trading days before the record date as being filed
before the record date with all other proxies being classified as being filed after the record date. We
use similar rules when classifying NYSE notifications of the record date to subscribers of its dataservices.

16

record dates from past record dates. For almost 20% of our firm-year observations,
there is more than one shareholder vote in a given year. In these cases, which tend
to address important issues at special shareholder meetings, there is no past record
date to predict a future record date. For the remainder of our observations, which
are annual meetings, seldom is a record date exactly one year after the previous
record date. On average there is a difference of 24 days (plus or minus 365 days) in
the voting record date from one year to the next. Thus, it does not appear thatinvestors can on a regular basis accurately predict future records dates from pastrecord dates.
In Panel B of Table 4 we divide our sample into regular filings and non-regularfilings. Non-regular filings include shareholder votes on mergers, special meetings,
proxy contests, and shareholder-initiated (as opposed to management-initiated)
proposals. Both DuPont and AmTrust were non-regular filings. Almost 6% of all
proxy filings involve non-regular votes; 35% of our firms have at least one nonregular filing. Because non-regular shareholder votes can offer valuable insights, we
use this division throughout the remainder of the paper.
Given that non-regular votes typically are more contentious than regular votes,
we would expect greater variation on the timing of the filing of non-regular proxies
compared with regular filings if managers are acting strategically. The evidence
supports this line of reasoning. Management is significantly more likely to file anon-regular proxy before the record date than they are to file a regular proxy before
the record date. This is seen in the summary statistics (Table 4, Panel B); a simple
linear probability model (Table 5, column 1); when we control for industry and year
fixed effects (Table 5, column 2); and when we control for a variety of other factors(Table 5, column 3). Across all three regressions in Table 5, the likelihood that a
proxy is filed late (that is, after the record date) decreases by approximately 17
percentage points when the issue to be voted upon is non-regular.
We next explore whether a late filing is correlated with how a vote eventuallyturns out. To identify how votes turn out, we use the ISS Voting Analytics databasewhich covers the outcome of shareholder voting for the Russell 3000 firms between

172003 and 2016. ISS reports the sponsor of each ballot proposal; whether
shareholders approved or rejected the proposal; and the percentage of votes cast for,against, and abstained. We have this information for 258,585 individual votes in our
sample involving 5,582 different firms. (Most proxies involve multiple items, hence
the large number of individual votes.)
We define a proposal to have a close outcome if the difference between votes infavor and the passing threshold is within 10% of shares outstanding (“close vote”).
Panel A of Table 6 presents summary statistics on these close votes. We see that
2.3% of all votes are close, with the incidence being higher for non-regular votes. For
example, 11.5% of all proxy contest votes turn out to be close. We also see thatproxies filed early are twice as likely to be associated with close votes comparedwith those filed late (5.7% versus 2.1%).
The relation between the timing of a filing and whether a proposal fails or
passes turns out to depend on who sponsors the proposal. As we see in the bottom ofPanel A of Table 6, there is only a modest relation with proposals made bymanagement. With proposals made by shareholders, presumably by shareholders
opposed to management, the difference is pronounced. When the proxy is filed after
the record date, 27.4% of the dissidents’ proposals fail. But when the proxy is filed
before the record date, fully 45.5% of the dissidents’ proposals fail.
These summary statistics are confirmed by regression analyses. Column 1 ofPanel B of Table 6 reports that the probability of a close vote is 5.83 percentage
points higher with a non-regular meeting than with a regular meeting. Columns 2-4
confirm that managers are significantly more likely to file a proxy before the record
date with a vote that turns out to be close.
Panel C of Table 6 is limited to shareholder proposals (dissident proposals) as
opposed to proposals made by management. Columns 2 and 3 show that these
proposals are more likely to fail when the proxy statement announcing the voting
record date is filed before that date actually occurs.
Exchange Subscription Services. The NYSE, but not Nasdaq, requires that
listed firms notify the exchange at least 10 days before a voting record date. The

18

Exchange then sells this information to subscribers (as part of its Corporate Actions
Reports) but does not release the information to the public at large. We have thedate the NYSE informs its subscribers of the record dates for 11,576 of ourshareholder meetings between 2010 and 2018 (inclusive).
Three dates are thus relevant for notification purposes: the voting record dateitself, the proxy filing date (which is the first announcement of the record day to the
public at large), and the date the NYSE informs it subscribers of the record date.17
The six possible permutations of these three dates are reported in Panel C of Table
4. The first thing to note is that all possible permutations are represented. Thissuggests that firms have the freedom to announce the record date either before orafter it occurs, and stock exchanges have the freedom to sell this information to
subscribers even when the record date is not yet known by the public at large. The
second thing to note is that the modal observation is Group 1: The NYSE notifies its
subscribers before the record date, and then after the record date the firm notifies
the public by filing a proxy. This is what happened at DuPont, and this is what
happens 81.4% of the time.
In Table 7 we conduct two investigations into the NYSE’s notification of therecord dates to its subscribers. Groups 3, 4, and 5 in Panel C of Table 4 arenoteworthy in that the NYSE informs subscribers of the record date after it has
occurred. The NYSE is clear that it will not waive the 10-day notification
requirement for any reason.18 It would thus appear that in these cases, which
17 For all firms no matter where listed, there is a fourth notification date that is potentiallyrelevant. SEC Proxy Rule 14a-13 requires that all public firms notify brokers at least 20 businessdays prior to any record date including for shareholder voting. For special meetings (but not for
regular annual meetings) if 20 days’ notice is not practical, notice may be shorter (time is not
specified in the regulations), but it still must be before the record date. Many firms use Broadridge
for this service. We approached Broadridge to obtain this information and were informed that thatthey do not retain records. We have no indication that brokers release this information to the publicat large. We do not know if brokers reveal this information to select investors.

“The Exchange has no authority to waive its record date notification requirement, so strict
compliance with the notification rules is essential in order to avoid situations where record dates ordates for shareholder meetings, dividends or other corporate actions must be reset.”https://www.nyse.com/publicdocs/nyse/regulation/nyse/NYSE_2018_Annual_Guidance_Letter.pdf. One example of how seriously
the Exchange takes this notification requirement is that the Cato Corporation informed the18

19

represent 13% of all observations, Exchange officials knew of the record date inadvance but for some reason delayed releasing the information until after the record
date had passed. Such delays could either be intentional or merely clerical errors. If
the late notifications by the NYSE are clerical errors, they should be uncorrelatedwith the type of filing. Regressions in columns 1-3 of Table 7 report that thelikelihood that Exchange officials delay a notification to their subscribers until after
the record date increases by approximately 10 to 14 percentage points when theissue to be voted upon is non-regular. This evidence is inconsistent with random
delays of reporting by Exchange officials.
Notification by the NYSE of the record date also has the potential to create an“unlevel playing field” in that some investors, namely those who subscribe to the
Exchange’s service, have potentially valuable information, namely a forthcoming
voting record date, that the investing public does not have because a proxy has not
yet been filed. This would be Groups 1 and 2 from Panel C of Table 4, or about 86%
of all observations. DuPont is an example. In contrast to Regressions 1-3 of Table 7,
Regressions 4-6 also reflect when management files a proxy statement and thus
notifies the public of the voting record date. This evidence suggests that thepotential informational advantage from subscribing to the NYSE service issignificantly lower with non-regular filings.
B. Trading Volume Changes
We now turn to evidence on stock trading volume to ascertain whether investors
react to the distributions of voting rights. Figure 1 plots the daily trading volume
in the 40 days surrounding the voting record date. Three broad empiricalregularities emerge, all of which are confirmed by untabulated regressions. First,
Figure 1 again illustrates the importance of disaggregating shareholder votes. For

Exchange on February 22, 2013 that the voting record date for its annual meeting would be March
25 when it meant to report March 26 as the record date. The Exchange called Cato on thisdiscrepancy. Cato had to file a 8-K, which it did on May 13, explaining that it was a clerical error;that this was its first filing with an error; and that the company was in compliance with all otherexchange listing rules. Cato did not file a preliminary proxy, and its definitive proxy, which included
the (correct) record date of March 26, was filed on April 11.

20

regular filings, there is little change in turnover in the 40 days surrounding therecord date. For non-regular filings, the situation is different in several respects. An
example of why it is important to disaggregate the distribution of shareholder votes
is Christoffersen et al (2007), which to our knowledge is the only published paperthat documents what happens to stock trading volume when stocks go ex vote. Aspart of a study of investors using borrowing stock to influence shareholder votes,
the authors investigate whether there is an active market for votes in the spot
market. They report only the equivalent of the middle line of Figure 1 (also Figure 1
in their paper), which is the trading volume for the full sample of observations
around the voting record date. As a result of this focus, they conclude that there is
not a market for votes in the spot market. Disaggregation clearly shows is an active
market for votes in the spot market with some categories of votes.
The second empirical regularity in Figure 1 is that with non-regular votes
trading volume is generally higher when a stock is cum vote than when it is ex vote.
The daily turnover rate is 0.94% during T-20 to T-5 compared with 0.79% during
T+6 to T+20 (where T=0 is the record day). The difference is significant at the 1%
level and likely reflects investors accumulating stock to gain additional votes for theforthcoming meeting. We expect investors to be more active with non-regular votes,
which can be contentious and close, than with regular votes, which often are neither
contentious nor close. Figure 1 is consistent with this reasoning.
The third empirical regularity in Figure 1 is that with non-regular votes once a
stock has gone ex vote, trading volume surges. Daily turnover increases from 0.80%
one day prior to the record date to almost 0.90% one day after the record date (theincrease is highly significant). To investigate whether this surge is driven by nonrecord-date information in the proxy, as opposed to the passage of the record dateitself, in untabulated tests we examine only those observations when the first nonregular proxy filing is at least six days after the record date. We observe nosignificant changes in the results of Figure 1, suggesting that non-record-date
information in proxies is not driving the surge in trading once a stock has gone ex21vote. In contrast to the voting record date, much of this information has often been
revealed weeks earlier, often in preliminary proxies.
The trading surge suggests that some investors are unwilling to hold theirshares until the meeting when the voting outcome will be determined and any
impact of the vote will be fully impounded into the stock price. It should be noted,
however, that only a minority of those who purchase stock cum vote sell it as soon
as it goes ex vote. If most people who purchased stock cum vote sold it as soon as it
went ex vote, then trading volume ex vote would be as high as it was cum vote. This
the data does not show. In untabulated regressions we find that the ex-record-datevolume surge (days T+1 to T+5) is positively related to the probability of a close voteand negatively related to whether a dissident’s proposal passes (both are significant
at the 1% level).
Figure 2 is limited to Nasdaq firms when the proxy is filed after the record
date. As explained earlier, with these observations there is no formal prenotification of the record date either to the public, via a proxy, or to select investors,
via a subscription service. Nevertheless, with non-regular votes there is a higher
level of trading activity before the record date as well as a surge thereafter. These
regularities suggest that some investors learn of the voting record date through asyet-unidentified means and trade accordingly.
C. Stock Price Changes
We now investigate how stock prices react when voting rights are distributed toshareholders. When this occurs, that is when stocks go from cum vote to ex vote,and the only thing that changes is that the purchaser of the stock no longer receives
the right to vote it at the forthcoming shareholders’ meeting. Cash flows, however,remain unchanged. Consequently, the difference between a stock’s price cum voteand its price ex vote is the value of an additional or marginal vote at the next
shareholders’ meeting. This ex day approach is the same one used by Dolley (1934)
to value rights offerings and by Elton and Gruber (1970) (and many others) to
calculate the after-tax value of cash dividends.

22

Table 8 reports the ex day stock price change for our full sample of over
100,000 observations. Column 1 in Panel B shows that over the three-day window
from Days –2 to 0 (inclusive), where Day 0 is the record day (“ex vote window”), theaverage (median) change for the entire sample is a decline of nine (twelve) basis
points, both of which are significant at the 1% level. We use a three-day window
because the uncertainty over when stock trades clear due to the lack of an explicit
ex day, suggested both by what happened at DuPont (Table 1) and by these data,
indicates that a multiple-day window is needed to capture the full effect of what
happens to prices when stocks go ex vote.
Non-Regular Votes. As with trading volume, there are pronounced differences inthe stock price reaction between distribution of regular versus non-regular votes.
For non-regular votes, the stock-price decline, or price of a marginal vote, is roughly
four times larger than with regular filings, on average 36 (median 35) basis points
versus 8 (median 10) basis points (Table 8, Panel B). All of these differences are
statistically significant. In Table 9 we break out the non-regular proxy filings into
their four (exhaustive but not mutually exclusive) categories of proxy contests,
special meetings, mergers, and shareholder-initiated proposals. All four categories
have significant stock-price declines that are substantially larger than the changes
for either ex days in general or those involving regular filings. The stock-pricedecline is the largest for shareholder-initiated proposals, 66 basis points. Recall that
it is with these votes that the early filing of a proxy is associated with a marked
decline in the probability of passage. In contrast, votes on merger proposals areoften non-contentious. Consistent with this reasoning, the decline is the least forthis category.
Close Votes. Table 10 reports the relation between a close vote (within 10% of
shares outstanding) and the price of the marginal vote (the abnormal stock-pricechange over the three-day ex vote window). A larger drop in the stock price, whichmeans a higher price for a marginal vote, is associated with a greater likelihoodthat the vote turns out to be close. Specifically, a 5% drop in the stock price over thethree-day ex vote window is associated with a 14-basis-point increase in the23

incidence of a close vote. Compared with the unconditional probability of a close
vote, which is 2.3%, this suggests that a 5% drop in the stock price is associatedwith an approximate 6% (14 basis points divided by 2.3%) increase in theprobability of a close vote.
Notification. In Table 11 we examine whether the ex day stock price change
varies with whether the proxy announcing the voting record date is filed before orafter the record date. We see that the average stock price reaction is more
pronounced when the proxy announcing the record date was filed sufficiently before
that date to enable investors to knowingly buy stock that is cum vote especially with
non-regular votes. The difference, however, is at best marginally significant.
The observations of Nasdaq firms in the bottom of Table 11 where the proxy is
filed after the record date are interesting because (as explained earlier) there is noformal notification to any investor. Nevertheless, as with trading volume, we stillobserve a statistically significant stock price decline after a stock goes ex vote withboth regular votes (10 basis points) and non-regular votes (33 basis points).
IV. Implications of Empirical Findings
Although the existing literature has paid considerable attention to shareholder
voting, it has almost totally ignored an integral part of this process—thedistribution of the votes to shareholders. Our empirical findings show that far frombeing a meaningless mechanical process, the distribution of votes to shareholders
matters. In this section, we discuss some of the reasons why it matters.
A. Notification to Investors of the Voting Record Date
Existing research has largely ignored whether investors know of the voting
record date before it occurs. Those few papers that touch upon this issue
erroneously claim that notification is universally after the fact, but that it does notmatter because investors, presumably all investors, somehow learn of the record
date before it occurs.
Several of our findings reject this line of reasoning. If notification of the record
date through the filing of a proxy does not matter, firms should not change whether

24they file a proxy before or after the record date based on the nature of the proposals
to be voted upon (Tables 3 and 4). If the timing of a proxy filing does not matter, it
is also unclear why this timing would be correlated both with how close a vote turnsout (Table 6) and whether a proposal ultimately passes (Table 6). If the timing of aproxy filing does not matter, it is unclear why sophisticated investors purchaserecord date information from the New York Stock Exchange. Because retailinvestors are unlikely to learn of voting record dates through non-proxy means, thisis one area where sophisticated investors would seem to have a systematic
informational advantage over retail investors. Finally, both activist investors andlegal scholars allege that firms at times manipulate records dates (Amtrust andfootnote 14).
Although we can say with confidence that whether a proxy is filed before orafter the record date matters, we do not yet have a full understanding of why someproxies are filed before the record date while other proxies are filed after the record
date. Part of the challenge of completing this picture arises because firms have thefreedom to file a proxy and thus announce a voting record date either before or after
it occurs (Tables 1-5), and NYSE officials have the freedom to sell record date
information to select investors even when the public does not know the date (Tables
1, 3, 6). This timing could also be influenced by activist investors. Perhaps as part ofnegotiations with management, they push for a certain timing on the release of therecord date. The timing of this decision may also be impacted by the composition of
the shareholder base, in particular the division between institutional investors (whoare more likely to confront management) and retail investors (who are more likely
to support management). This, it is possible that firms choose to release certain
record dates beforehand and other record dates after the fact. Sorting out theseseveral endogenous decisions is one topic worthy of future study.
The want of any current definitive explanations for these timing decisions,however, should not prevent investors and policymakers from addressing several
potentially important issues related to notification to investors of the voting record
date. We will now discuss some of these issues.

25

Should firms have the discretion to determine when the voting record date isannounced including announcing it after it has occurred? Currently, firms havebroad discretion on when they reveal the voting record date to the public by filing adefinitive proxy. Under current law, firms may impede activist investors byannouncing the record date after it has occurred. This is what happened at
AmTrust. Conversely, managers may also help investors allied with themaccumulate shares and thus exert additional influence by revealing the voting
record date before it occurs, certainly publicly by filing a proxy and possibly
privately. Brav et al (2019) find that retail investors are more supportive ofmanagement than are institutional investors. Because retail investors presumablylearn of voting record dates through proxies, this might help explain why managers
are more likely to file proxies before the record date with controversial votes thanwith regular votes (Tables 4 and 5).
Should all investors learn the record date at the same time? A cornerstone offederal securities laws is that all investors should have equal access to material
information. This, however, typically is not the case with voting record dates. Some
investors learn of the record date before the public learns, either through the
NYSE’s subscription service or through another as-yet-unidentified means.
Furthermore, these investors usually learn of the record date before it occurs while
the public learns of the record date after it has passed. Thus, in many instances
investors who know a forthcoming record date are trading with individuals who lack
this information. DuPont is an example. Here the difference between institutionaland retail investors deserves attention.
Securities lawyers have suggested that this situation might have arisen because
traditionally people have not considered the voting record date to be material,
probably because there was no empirical evidence on what happens when votes are
distributed to shareholders. An accepted definition of material information is
information that causes people to change their behavior. By this definition, ourpaper offers a wide variety evidence that the distribution of votes to shareholders
can be a material event.

26

Should stock exchanges be allowed to sell non-public material information?
Although several papers document efforts by management to influence the voting
process, to our knowledge ours is the first paper to raise the possibility that stock
exchange officials are also influencing the voting process by selling non-public
information identifying the voting record date to select market participants. Thisissue goes beyond voting because the NYSE collects a broad array of data fromlisted firms as part of its “self-regulation” initiative and then sells the data to
subscribers. The Corporate Actions package alone, which is where we obtain our
NYSE data, “comprises several reports providing over 60 different corporate actions
types for all equities listed on the NYSE Group … including but not limited to cash
dividends, stock dividends, distributions, splits, new listings (IPOs), suspensions
and delistings.”19 Investigating the impact on stock prices and trading volume ofselling these other data seems an important topic for future study.
How do some investors learn of the record date before it occurs when a proxy has
not been filed and there is no notification by the stock exchange? Some investors
learn of voting record dates before they occur even when there is no formal prenotification of the record date either through a proxy or by the stock exchange(Figure 2, Table 11). One possibility would be that corporate insiders are trading or
informing those who trade; another possibility is that brokers (who must be
informed of a record date at least 20 business days prior to the record date under
SEC Proxy Rule 14a-13) inform select customers of the record date. Even if someinvestors learn the voting record date beforehand, it appears that not all investors
learn the voting record beforehand. Recall that Carl Icahn only learned of the record
date with AmTrust’s going-private vote when management filed a proxy well after
the record date. Moreover, if all investors learn of a voting record date even when aproxy has not yet been filed, it is unclear why management and stock-exchange
officials would act in the strategic ways that we find (Tables 3-6).

19 https://www.nyse.com/markets/nyse-arca/reports

27

From a policy perspective, we see two broad ways to address these notification
issues. First, by-laws and articles of incorporation could change to require thatmanagement publicly announce the voting record date a certain number of days
before it actually occurs. Second, laws could change. Part of the reason for theunusual state of affairs with notification of voting record dates is that shareholder
voting falls between state and federal laws. State laws require annual shareholder
meetings and that shareholders make certain decisions, such as the election of
directors and changes to articles of incorporation. Federal laws require neither
shareholder voting nor shareholder meetings, but when shareholders vote public
firms must comply with federal securities law by filing a proxy statement that
identifies the voting record date.
For both of these potential policy approaches, it is instructive to consider
current European Union laws.20 As in the United States, proxies in Europe mustspecify the record date for determining who may vote in a forthcoming shareholders’meeting (sometimes called “announcements of convocation” although here we willrefer to them as proxies for clarity in comparison). In contrast to the United States,
European record dates must come at least eight days after the filing of the proxy.
Consequently, in Europe everyone learns of the voting record date presumably at
the same time and certainly (at least eight days) before the record date itself.
Furthermore, in Europe the record date may be no more than 30 days before theshareholders’ meeting. In the United States, this is left to state law. In both
Delaware and California, the record date may be no more than 60 nor less than 10days before the shareholders’ meeting. (This is one example of how regulation of thevoting record date in the United States is governed by both federal and state laws.)
For our sample, the average time between the record and meeting dates is 49.8 days
(untabulated). European law does not further regulate the period between therecord and meeting dates, although the laws of some member countries do. Under

20 Directive 2007/36/EC of the European Parliament and of the Council of 11 July 2007, “On theexercise of certain rights of shareholders in listed countries.”

28

Finnish law, for instance, the record date is always the tenth day before theshareholders’ meeting.
Lastly, our findings on different notification dates involving material
information for different types of investors present research opportunities beyond
shareholder voting. Many papers extend Kyle (1985) by modeling trading between
sophisticated and unsophisticated (sometimes called retail) investors. It has beenchallenging to identify situations where this occurs on a systematic basis. The
trading of stocks when some investors, presumably sophisticated investors who
subscribe to the NYSE’s service, know of the voting record date, while otherinvestors, presumably retail investors, who do not know the date seems a fruitfulvenue for testing these theoretical papers.
B. The Dynamics of Corporate Voting
Our findings on the distribution of voting rights to shareholders offer several
insights into the dynamics of corporate voting.
Disagreeing shareholders and disaggregation of votes. One such insight confirmsthat shareholders are not homogeneous, and they sometimes disagree overcorporate policies (Levit et al 2019). When this is the case, our findings show thatsome disagreeing shareholders are willing to pay more for stocks that are cum votebecause they will have additional influence over the outcome of the vote.21 Stockprices decline when a stock goes ex vote because the demand is lower as it lacks avote for the forthcoming meeting where the policy will be decided. If there are no
disagreements among shareholders, there would be no decline in stock prices whenstocks go ex vote; the marginal vote should sell for zero because it would have no
impact. We find this is true for many votes but not for all votes.
This leads to another finding: it is important to disaggregate the distributions ofvotes to shareholders because only some votes will be close and impact firm value.
Disaggregation is also key with other corporate events, such as earnings

21 For example, Kandel and Pearson (1995) and Hong and Stein (2007).

29

announcements. One way to do this is to identify those votes where the ex day stock
price decline is significant.
The conceptual nature of shareholder voting. We find that some shareholder
votes are best viewed within an entrepreneurial conceptual framework. Changes in
trading volume around the record date combined with the ex day drop in stock
prices show that at times disagreeing shareholders actively seek to influence thevoting outcome by purchasing additional shares. That is to say, some investors buy
marginal votes to gain influence. The price of a marginal votes varies in predictableways with the proposals before shareholders and how firms and stock exchanges
notify investors of the record date (Tables 7-10). In some instances, investors arewilling to pay 5% more for a stock cum vote than the same stock ex vote. DuPont
was such an example during the 2015 proxy contest (Table 1).
This entrepreneurial view of shareholder voting contrasts with the judicial viewof shareholder voting which sees buy-and-hold shareholders acting as relatively
passive judges by choosing among competing managerial teams. Jensen and Ruback(1983, p. 6) explain, “The managerial competition model … views competing
management teams as the primary activist entities, with stockholders including
institutions, playing a relatively passive, but fundamentally important, judicial
role.”
It is likely that some shareholder votes fit the entrepreneurial model whileothers fit the judicial model (again, highlighting the need to disaggregate
shareholder votes).22 Sorting this out is worthy of future study. Also worthy of
future study is to explore whether there is an interaction between the two models.
In recent years increasing amounts of stock are being voted by the largest
institutional investors, in particular BlackRock, Vanguard, and State Street. It is
unlikely that these very large investors are accumulating marginal votes toaugment their influence. It is more likely that entrepreneurial investors are the

22 Brav et al (2008) study the management changes made by activist hedge funds. These
investors typically fit within the category of what would be considered entrepreneurial investors.

30

ones buying marginal votes. Do these entrepreneurial investors, such as Carl Icahn,
act as substitutes or complements with the very large institutional shareholders?
Has the role of entrepreneurial investors changed over time? One empirical strategy
for addressing such questions would be to measure how the ex day changes in stock
prices and trading volume move over time with the issue to be voted upon and theconfiguration of ownership at the firm. This is one way that ex day changes inprices and volume can be used to address other issues associated with corporate
voting.
Price of a marginal vote. Manne (1962), in a seminal paper which was one of thefirst to question the then-conventional wisdom that shareholder voting did not
matter, called for a broad study to quantify what happens to stock prices when they
go ex vote.23 Surprisingly, our paper is the first such study (Tables 7, 8).There are,however, two lines of research that are related to what we do in that they alsomeasure changes around the voting record dates. Kind and Poltera (2013) and
Kalay, Karakas, and Pant (2014) use option pricing to create a synthetic security
that has the same cash flows as the underlying stock but lacks the right to vote.24
They compare the price of that security with the price of the underlying stockaround the record day. Christoffersen et al (2007) and Aggarwal et al (2015)
examine stock lending around voting record dates. Someone borrowing stock andholding it on the record date is entitled to vote the stock. In follow-on research, weare comparing what one learns both theoretically and empirically from ourapproach versus these two other approaches.
Voting and selling immediately. Finally, our finding of a surge in trading
immediately after some stocks go ex vote suggests a different dynamic from what
has been modeled in the literature to date. Li at al (2019) propose that shareholders

23 Manne offers one intriguing example of what happened to Allegheny Corporation’s stock pricewhen it went ex vote during a 1961 proxy fight.
24 An investor simultaneously buys a call option and sells a put option with the same strikeprice and time to expiration. The investor then invests an amount equal to the present value of thestrike price in a risk-free asset.

31

disagreeing over the best policy to increase firm value will not trade until theoutcome of the vote is revealed, which for a close vote will usually be at theshareholders’ meeting. They present evidence that with close votes stock trading
volume often surges around the time of the meeting. Their interpretation is that
institutional shareholders on the losing side sell only once the outcome of the vote is
known.
We find that with some controversial votes there is also a surge in trading
immediately after a stock goes ex vote (Table 1, Figures 1 and 2). One interpretationis that the selling shareholders want to influence the outcome for private gain as
opposed to increasing the stock price. Hence, they are willing to delay selling theirstock at a lower expected price once it has gone ex vote but fear that the outcome,which presumably they voted for, would lower the firm’s stock price. To limit theirlosses, they sell as soon as the stock has gone ex vote. This might describe managers
who are voting to preserve their jobs or institutional investors who are voting tocurry favor with management. Fully understanding the surge in trading
immediately after some stocks go ex vote likely will offer new insights into theunderlying dynamics of shareholder voting.
V.

Conclusion
This is the first study of what happens with one of the most common control

events for any firm—the distribution of voting rights to shareholders which resultsin stocks going ex vote. While the many empirical regularities we find show that thehistoric neglect of what happens when stocks go from cum vote ex vote is notwarranted, at the same time they raise numerous questions for both policymakers
and researchers. Addressing these questions will be important because the ultimate
control of any corporation rests with its shareholders and their power comesprimarily through voting. Many shareholder votes are perfunctory, but some arenot. It is with the distribution of these votes where the ex day changes are the mostinformative.

32

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Table 1
DuPont’s Stock Returns, Trading Volume, and Key Events around the Distribution of
Voting Rights to Shareholders in the 2015 Proxy Contest
The record date of March 17 determined which shareholders could vote in the 2015
proxy contest involving Trian’s proposed directors and bylaw changes. Excess stock
returns are calculated using the Fama-French three-factor model, which isestimated from 360 days through 60 days before the record date. Trading volume isthe number of DuPont shares traded. Data from CRSP and the NYSE. Shaded
entries denote potentially important events.
ExcessReturns
February 27
0.04%

Trading
Volume3,596,192

March 20.37%

3,263,524

March 3-0.23%

4,021,870

March 40.54%

3,120,391

March 50.25%

3,661,119

March 60.96%

7,559,485

March 90.24%

9,007,420

March 101.94%

7,770,743

March 110.73%

7,544,163

March 120.21%

7,837,543“Academic” Cum Date

March 130.71%

8,904,227“Academic” Ex Date

March 16

-5.46%

15,913,916

March 17-2.80%

16,473,563

March 180.70%

8,498,122

March 19

-1.28%

5,979,517

March 20-1.08%

8,482,657

March 230.30%

4,295,930

March 24

-0.46%

3,992,941

March 25

-1.03%

5,073,101

March 26

-0.13%

4,605,833

March 27

-0.23%

4,149,506

March 30

0.17%

4,074,233

NYSE reports record date of March 17 to its subscribers

Record Date

Proxy publicly identifies March 17 record date for first time

Table 2
AmTrust’s Stock Returns, Trading Volume, and Key Events around theDistribution of Voting Rights to Shareholders in the 2018 Going-Private Proposal
The record date of April 5 determined which shareholders could vote on the 2018
proposal to take AmTrust private. The proposal was made by the CEO who owned amajority of the stock. Passage of the proposal was conditional on the approval of amajority of the minority shareholders. Excess stock returns are calculated using theFama-French three-factor model, which is estimated from 360 days through 60 days
before the record date. Trading volume is the number of AmTrust shares traded.
Data from CRSP and the 13D filed by Carl Icahn on May 17. Shaded entries denotepotentially important events.

March 29
March 30
April 2
April 3
April 4
April 5
April 6
April 9April 10
April 11
April 12April 13
April 16
April 17
April 18
April 19
April 20
April 23
April 24
April 25
April 26
April 27
April 30
May 1
May 2
May 3
May 4
May 7
May 8

ExcessReturns-0.10%-0.76%
0.06%
0.15%
0.65%
-1.72%
0.87%
0.87%-0.61%
2.54%-2.05%-0.12%-0.09%-0.31%
0.37%-0.43%
0.20%-0.22%-1.46%
1.34%
1.61%
0.48%
0.90%
1.53%
-0.12%
0.70%-0.72%
1.06%-0.29%

Trading
Volume496,540
752,733
904,207469,293412,337
344,492
714,543
381,383
667,277
709,840
1,358,872
826,464
487,997
1,067,576
525,512692,475
392,657
1,037,815
1,222,508
526,019858,757
1,015,306
462,026
2,885,946
5,174,797
2,408,089
2,431,234
4,036,827
3,167,099"Academic Cum Date""Academic Ex Date"
Record Date
Preliminary proxy does not identify already-set record date

Icahn starts buying AmTrust stock

Proxy publicly identifies April 5 record date for first time
Icahn crosses 5% ownership thresholdMay 9May 10
May 11
May 14
May 15
May 16
May 17
May 18May 19-0.74%
0.14%
0.36%-0.46%-0.26%-0.09%-0.31%
2.88%-0.27%

997,451
1,193,960
1,037,224
972,061
1,145,978866,1313,010,582
8,241,798
4,001,529

Icahn files initial 13D revealing 9.4% stakeTable 3
Distribution of Votes versus Distribution of Cash Dividends
Cash dividends and voting rights are the two major distributions corporations maketo their shareholders. This table highlights key differences and similarities between
the two distributions and notes the difference in academic attention. Some of thepoints listed for the distribution of votes come from empirical findings later in thispaper.
Distribution of Cash Dividends

Distribution of Votes

Over 100 papers focus on what happens
when stocks go ex-dividendThis is the first paper to focus on what
happens when stocks go ex-vote

All record dates are publicly available
far in advance

91% of record dates become publicly
available after the fact; timing
varies with the type and outcome ofvote

Stock exchanges set explicit ex-date

Stock exchanges do not set explicit
record date which leads touncertainty over when stocks go exvote

All investors learn of the record date atsame time

Some investors purchase record date
information from NYSE, usually
before the date itself and before thepublic learns the date

Many papers quantify the ex-day stock
price changeThis is the first paper to quantify the
ex-day stock price change

Many papers quantify what happens to
trading volume when stocks go exdividendThis is the first paper to quantify what
happens to trading volume whenstocks go ex-vote

Cash dividends are integral to firm
valuation

Votes are integral to how shareholders
control managers and thus limit
agency costs

Covered largely by state law

Falls between federal and state laws

Only 1/3 of firms distribute (pay) cash
dividends

All firms distribute votes at least once ayearTable 4
Relation between the Proxy, Record, and Exchange Notification Dates
Panel A reports whether the first proxy announcing the record date for determining whichshareholders may vote in a forthcoming meeting was filed before or after the actual record date.
Proxy filed before record date means that the proxy initially announcing the voting record date
was filed at least four trading days before the record date. In these cases, investors who wanted
to purchase stock that could vote at the forthcoming meeting were able to knowingly do so. These
proxies are the first public announcement of a record date. Panel B breaks this data down by thetype of shareholder meeting. There are 114,368 observations in Panels A and B between 1996
and 2018 (inclusive). Panel C is restricted to firms listed on NYSE and reports the order of theproxy, record, and stock exchange notification dates. The stock exchange notification date iswhen the NYSE notifies subscribers of its data services of the record date. The six groups containall possible permutations with the three dates. There are 11,576 observations in Panel C
between 2010 and 2018 (inclusive).
Panel A: All Observations
Proxy Filed Before Record Date

9%

Proxy Filed After Record Date

91%

Panel B: Proxies Filed After Record Date
Regular Meeting

92%

Merger92%

Special Meeting71%

Shareholder-Initiated Proposal

60%

Contested

55%
Panel C: Order of Proxy, Record, and Exchange Notification Dates
Group 1

Group 2

Group 3

Group 4

Group 5

Group 6

Exchange

Exchange

RecordRecord

Proxy

Proxy

Record

Proxy

Proxy

Exchange

RecordExchange

Proxy

RecordExchange

Proxy

Exchange

RecordFull Sample

81.4%

5.0%

10.5%

1.3%

1.1%

<1%

Regular

82.6%

4.8%

10.1%

1.1%

<1%

<1%

Non-Regular

48.8%

11.5%

21.9%

7.3%

5.7%

4.7%

Table 5
Are Proxies Filed After the Record Date?
Linear probability regressions of the timing of notifications of voting record dates
through the filing of a definitive proxy. Proxy filed after record date takes a value of
one if the initial proxy identifying the voting record date was not filed at least four
trading days before that date, which would enable investors to knowingly purchasestock that could vote at the forthcoming shareholders’ meeting. Non-regular filings
are proxy contests, special meetings, mergers, and shareholder-initiated proposals.
All other filings are Regular Filings. Sales is the natural logarithm of annual sales.
Amihud Illiquidity is Amihud (2002) illiquidity measure. NYSE, AMEX, andNASDAQ are indicators of the exchange on which the stock is listed. Tobin’s Q is
the ratio of market value to book value of assets. 1996-2018 (inclusive). *, **, and*** indicate statistical significance at the 10%, 5%, and 1% levels, respectively.
(Standard errors are clustered at firm level and are in parentheses.)(1)
Non-Regular Filing-0.1793***(0.0069)

Proxy Filed After Record Date(2)
-0.1741***(0.0069)(3)-0.1709***(0.0070)

Sales (log)0.0077***(0.0010)

Amihud Illiquidity-0.0156***(0.0026)

NYSE-0.0019(0.0421)AMEX-0.0109(0.0424)

NASDAQ-0.0025(0.0419)

Tobin’s Q-0.0026***(0.0005)

Constant

0.9244***(0.0014)0.8705***(0.0284)0.8485***(0.0524)

Year FE

No

Yes

Yes

Industry FE (3-digit SIC)

No

Yes

Yes

N

86,12785,704

81,862

R2

0.020

0.035

0.042

Table 6
Relation between the Proxy Date, Record Date, and Voting Outcomes
Panel A reports summary statistics on voting outcomes and the filing of the proxyannouncing the record date for the vote. Close votes are when the difference
between votes cast in favor of a proposal and the passing threshold is within 10% of
total shares outstanding. Data on voting outcomes is from the ISS Voting Analytics
database. Panel B reports linear probability regressions where the dependent
variable takes a value of one if the shareholder vote turns out to be close and zerootherwise. Panel C reports linear probability regressions where the dependent
variable takes a value of one if a shareholder-initiated proposal is defeated and zerootherwise. The independent variables in the regressions are indicators of nonregular filings and proxies filed before the record date. Non-regular filings are proxycontests, special meetings, mergers, and shareholder-initiated proposals. Proxies
filed before the record date were filed at least four trading days before that date,thereby enabling investors who wanted to purchase additional stock that could voteat the forthcoming shareholders’ meeting to be able to knowingly do so. 2003-2016(inclusive). *, **, and *** indicate statistical significance at the 10%, 5%, and 1%
levels, respectively. (Standard errors are clustered at the firm level and are reported
in parentheses.)
Panel A
Meeting Type
Full Sample
AnnualAnnual/Special
SpecialProxy Contest

Filing Status
Proxy Filed before Record Date
Proxy Filed after Record Date

Close Vote
2.3%
2.2%
4.5%
9.6%
11.5%

Close Vote
5.7%
2.1%

Proposal Fails to Pass*

Proxy Filed before Record Date
Proxy Filed after Record Date*(Non-Regular Meetings Only)

Sponsor of Proposal
Management
Shareholder
3.3%
45.5%
2.8%
27.4%

Panel B
Dependent Variable: Close Vote(1)
Non-regular meetings

(2)

(3)

0.0583***(0.0066)(4)

0.0468***(0.0064)

Filed Before Record Date

0.0387***(0.0038)

0.0339***(0.0037)

0.0327***(0.0007)0.0203***(0.0007)

Constant

0.0223***(0.0007)0.0211***(0.0007)0.0206***(0.0007)

Meeting Fixed Effects

No

No

No

0.002
258,345

0.004
258,345

0.005
258,345

R2
N

Yes
0.007
258,345

Panel C
Dependent Variable: Shareholder-Initiated Proposal Defeated(1)
Non-regular meetings-0.4022***(0.0450)

Filed Before Record Date

(2)

(3)

-0.4453***(0.0453)
0.0663**(0.0289)0.0556**(0.0259)0.8005***(0.0113)

Constant

0.8037***(0.0109)0.8002***(0.0113)

Meeting Fixed Effects

No

No

Yes

0.071
6,482

0.073
6,482

0.081
6,482

R2
N

Table 7
NYSE Notification of Voting Record Date
Linear probability regressions of the NYSE notification of the voting record date to
subscribers of its data services. In columns 1 through 3, the dependent variabletakes a value of one if the NYSE notification comes too late for subscribers toknowingly purchase stock cum vote. This investigates whether the NYSE
notification of the voting record date is random or strategic. In columns 4 through 6,
the dependent variable takes a value of one if the NYSE notification to subscribersof its data services comes before the proxy filing date, which is how the public atlarge learns of the record date. This investigates whether the NYSE’s notification
creates an “unlevel playing field.” Non-regular filings are proxy contests, special
meetings, mergers, and shareholder-initiated proposals. All other filings are
Regular Filings. Sales is the natural logarithm if annual sales. Amihud Illiquidity is
Amihud (2002) illiquidity measure. Tobin’s Q is the ratio of market value to bookvalue of assets. 1996-2018 (inclusive). *, **, and *** indicate statistical significanceat the 10%, 5%, and 1% levels, respectively. (Standard errors are clustered at firmlevel and are in parentheses.)

Non-Regular Filing

NYSE Notification After Record Date
(1)
(2)
(3)

NYSE Notification before Proxy Date
(4)
(5)
(6)

0.1083***(0.0242)-0.4037***(0.0298)

0.1489***(0.0238)

0.1450***(0.0236)-0.4469***(0.0300)-0.4438***(0.0299)

Sales (log)-0.0054**(0.0023)-0.0011(0.0021)

Amihud Illiquidity

0.0321**(0.0142)0.0093***(0.0027)

Tobin’s Q

0.0013(0.0019)-0.0700***(0.0182)

Constant

0.1131***(0.0034)

0.4460***(0.0290)0.4789***(0.0345)0.8608***(0.0039)0.4935***(0.0326)

0.4339***(0.0443)

Year FE

No

Yes

Yes

No

Yes

Yes

Industry FE (3-digit SIC)

No

Yes

Yes

N

8,989

8,989

8,945

No
8,989

Yes
8,989

Yes
8,945

R2

0.003

0.126

0.129

0.038

0.146

0.154

Figure 1
Stock Trading Volume around the Voting Record Date
Stock trading volume is the daily volume divided by the number of shares
outstanding (in percentage terms). Non-regular filings are proxy contests, special
meetings, mergers, and shareholder-initiated proposals. All other filings are
Regular Filings. Shaded area denotes a possible post-record-date surge in trading
volume. The sample covers 101,141 record dates from 1996 to 2018 (inclusive). Data
from CRSP.

Figure 2
Stock Trading Volume around the Voting Record Date for
Nasdaq Firms when the Proxy was Filed after the Record Date
Proxy filed after record date means that the proxy initially announcing the record
date was filed less than four trading days before the record date, thereby preventing
investors who wanted to purchase stock that could vote at the forthcoming
shareholders’ meeting from being able to knowingly do so. Stock trading volume isthe daily volume divided by the number of shares outstanding (in percentage
terms). Non-regular filings are proxy contests, special meetings, mergers, andshareholder-initiated proposals. Nasdaq does not require firms notify it in advanceof voting record dates, so with these observations there is no formal announcementof the record date before it occurs. Shaded area denotes a possible post-record-datesurge in trading volume. The sample covers 54,682 record dates from 1996 to 2018
(inclusive). Data from CRSP.

Table 8
Returns as Stocks go Ex Vote
Panel A reports the abnormal stock returns from Days –5 to +2 where Day 0 is therecord date for a distribution to shareholders of the right to vote in a forthcoming
meeting. The return is calculated using Fama-French three-factor model, which isestimated from 360 days through 60 days before the record date. Shaded area
denotes the “ex vote window” of Days –2 to 0 (inclusive). Panel B reports the
cumulative returns for the ex vote window. The difference calculation in Panel B is
between regular and non-regular filings. Non-regular filings are proxy contests,
special meetings, mergers, and shareholder-initiated proposals. All other filings are
Regular Filings. 1996-2018 (inclusive). *, **, and *** indicate statistical significanceat the 10%, 5%, and 1% levels, respectively. (Standard errors are in parenthesis.)
Panel A: Daily Stock Returns

Day = −5
Day = −4
Day = −3
Day = −2
Day = −1
Day = 0 (Record Date)
Day = +1
Day = + 2

All Filings(1)-0.0002(0.0001)-0.0003***(0.0001)-0.0001(0.0001)-0.0002(0.0001)-0.0003***(0.0001)-0.0002(0.0001)
0.0002(0.0001)-0.0003**(0.0001)

Regular Filings(2)-0.0002(0.0001)-0.0003***(0.0001)-0.0001(0.0001)-0.0001(0.0001)-0.0003***(0.0001)-0.0001(0.0001)
0.0001(0.0001)-0.0004***(0.0001)

Non-Regular Filings(3)-0.0004(0.0006)-0.0011*(0.0006)-0.0005(0.0006)-0.0010**(0.0006)-0.0014**(0.0006)-0.0010*(0.0006)
0.0014**(0.0007)0.0006(0.0006)

Panel B: Cumulative Stock Returns from Days –2 to 0 (ex vote window)
All Filings
Mean

(1)
-0.0009***(0.0002)

Difference
Median

Non-RegularFilings(2)(3)-0.0008***-0.0036***(0.0002)(0.0010)–0.0028***(0.0011)-0.0012***(0.0001)-0.0010***-0.0035***(0.0001)(0.0003)-0.0025***(0.0004)51%

50%

Difference
Percent Negative

Regular Filings

Number of Record Dates

101,141

95,460

Number of Firms

12,54912,211

57%
5,681(5.6% of filings)
4,341(34.6% of firms)

Table 9
Returns as Stocks go Ex Vote with Non-Regular Filings
Non-regular filings are proxy contests, special meetings, mergers, and shareholderinitiated proposals. Some non-regular filings involve more than one of thesecategories, so the reported categories are not mutually exclusive. The stock return isthe average cumulative abnormal stock returns from Days –2 to 0 (inclusive) where
Day 0 is the record day for determining which shareholders may vote (ex votewindow). The returns are calculated using the Fama-French three-factor model,
which is estimated from 360 days through 60 days before the record date. All stock
returns in this table are significant at the 1% level. 1996-2018 (inclusive).
Stock Returns(basis points)% Negative

Observations

Mergers

–29

59%

3,142

Proxy Contests

–30

55%

962

Special Meetings

–56

54%

1,325

Shareholder-Initiated Proposals

–66

56%

425

Table 10
Closeness of Vote
Linear probability regressions where the dependent variable takes a value of one if
the shareholder vote turns out to be close and zero otherwise. Close votes are when
the difference between votes cast in favor of a proposition and the passing thresholdis within 10% of total shares outstanding. The independent variable Ex Vote Stock
Price Change is the cumulative abnormal stock returns from Days –2 to 0(inclusive) where Day 0 is the record day for determining which shareholders may
vote (ex vote window). The returns are calculated using the Fama-French threefactor model, which is estimated from 360 days through 60 days before the record
date. Data on the closeness of the vote is from the ISS Voting Analytics database.
Most proxy statements involve multiple items for shareholder voting. 2003-2016(inclusive). *, **, and *** indicate statistical significance at the 10%, 5%, and 1%
levels, respectively. (Standard errors are clustered at the firm level and are reported
in parentheses.)
Dependent variable: Close Vote
(1)

(2)

Ex Vote Stock Price Change-0.0288**(0.0115)-0.0277**(0.0112)Constant

0.0234***(0.0007)0.0221***(0.0007)

Meeting Type Fixed Effects

No

R2
N

0.00%
258,585Yes
0.50%
258,585

Table 11
Stock Returns and Notification of Voting Record Date through the Filing of a Proxy
Average abnormal stock return from Days –2 to 0 where Day 0 is the record date fora distribution to shareholders of the right to vote in a forthcoming meeting (ex votewindow). Proxy filed before record date means that the proxy initially announcing
the record date was filed at least four trading days before the record date, thereby
enabling investors who wanted to purchase additional stock that could vote at theforthcoming shareholders’ meeting to be able to knowingly do so. All other filings
are considered to be after the record date. The stock returns are calculated using
Fama-French three-factor model, which is estimated from 360 days through 60 days
before the record date. Non-regular filings are proxy contests, special meetings,
mergers, and shareholder-initiated proposals. All other filings are Regular Filings.
1996-2018 (inclusive). *, **, and *** indicate statistical significance at the 10%, 5%,
and 1% levels, respectively. (Standard errors are in parentheses.) Number ofobservations is directly below the standard errors. Column (3) reports the difference
between the first two columns as well as the standard errors of a one-sided t-test,
which shows whether the value in column (1) is smaller than the value in column(2).
Proxy Filed Before
Record Date

Proxy Filed After
Record Date

One-sided test on
difference in means

(1)

(2)

(3)

Regular-0.0013(0.0009)
6,999-0.0007***(0.0002)88,461-0.0006(0.0009)

Non-Regular-0.0066***(0.0023)
1,005-0.0029***(0.0009)
4,676-0.0037*(0.0025)-0.0019*(0.0012)4,423-0.0010***(0.0003)51,751-0.0009(0.0012)-0.0033**(0.0013)-0.0057*(0.0036)

Full Sample

NasdaqRegularNon-Regular-0.0090***(0.0033)606