Foley, Cebula, Jun & Boylan: An Analysis of Withdrawn Shareholder Proposals


In this study we analyze withdrawn shareholder proposals to gain insight into the role of shareholder proposals in the governance of public corporations. A cursory look at the data suggests that unions are the most likely group to withdraw proposals. We focus on the behavior of unions and find that unions often resubmit a shareholder proposal which had garnered significant support in the previous year, only to withdraw the proposal in the second year. Interestingly, about fifty percent of those resubmitted proposals are withdrawn but are not resubmitted in year 3 or later. Our contention is that the proposals were withdrawn in year 2 because the issue was settled in a manner agreeable to the union. Furthermore, our research suggests that unions are more likely to withdraw proposals when the prior years’ appeal is higher, when firms have a record of poor performance, lower insider ownership, or relatively independent boards. This phenomenon suggests that unions submit and withdraw shareholder proposals strategically. We contend that unions use shareholder proposals and the withdrawal of proposals to improve conditions for union workers at the expense of shareholder value.

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