Is Acquiring-Firm Shareholder Approval in Stock-for-Stock Mergers Perfunctory?

Despite mixed stock returns for acquirer shareholders in large stock-for-stock mergers, acquiring-firm merger proxy votes rarely fail, and in our sample the average approval out of votes cast exceeds 95%. We seek to determine whether such votes are effective in monitoring management's acquisition policy or are merely perfunctory. We find that the margin of approval varies substantially with firm and deal characteristics. Furthermore, while our sample does not contain failed votes, some deals are only narrowly approved. These findings support the notion that merger proxy votes provide credible threats