# 12-094/IV/DSF38 (2012-09-14)

Author(s)
Ali Akyol, University of Melbourne; Konrad Raff, VU University Amsterdam; Patrick Verwijmeren, VU University Amsterdam, Duisenberg school of finance, and University of Glasgow
Keywords:
Broker voting, shareholder empowerment, Securities and Exchange Commission, board effectiveness
JEL codes:
G34; G38

After pressure from shareholder activists, proxy advisory firms, and the New York Stock Exchange, the Securities and Exchange Commission has eliminated uninstructed broker voting in director elections. We observe that average director approval rates remain high after the change in regulation, while the probability of a director being voted off the board remains low. In addition, we find no evidence of significant wealth effects of the change in regulation. We do find that firms are increasingly letting shareholders ratify their auditors after the change in regulation, which helps in establishing a quorum.