Resumen de Do Managers Choose the Proxy Material Delivery Method Strategically?

Yu Cai, Yanhui Jiang, Huifang Yin

• Using hand-collected data for 2007-2008, we show that using the notice-only option to deliver proxy materials is an effective way to influence proxy voting outcomes in favor of the management. Firms performing poorly, firms with high CEO pay, and firms restating earnings are more likely to choose the notice-only option. In the subsequent year, notice-only firms experience lower stock returns and a drop in analysts’ earnings forecasts, consistent with that real economic factors drive the choice of the notice-only option. Overall, our findings suggest that the managers strategically use proxy delivery methods to control the negative impact of bad news.