AAA Spark Meeting of Regions

Media Coverage and Firm-Level Corporate Governance Changes: Evidence from Proxy Contests

• In Event: CsR

Abstract

Using a sample of proxy contests over 2000-2016, I find that when deciding to vote on the dissident sponsored proposals, shareholder-voters are sensitive to the sentiment of the press coverage of the proxy contest, but not to its level. I interpret this result as press not only disseminating information but also shaping investors' perceptions and their voting behavior. I further find that firm managers too are sensitive to both the sentiment and the level of media coverage, while deciding to enter into an early settlement agreement with the activist. I interpret this result as the press imposing material costs, including reputational cost, on the management. More broadly, the media plays an important role in influencing corporate governance changes (initiated by the dissident shareholders) in the firm.

Author

• Farzana Afrin, Boston College