Proxy Issue Proposals: Impact of the 1992 SEC Proxy Reforms.

This article assesses the impact of the 1992 SEC reforms that enhanced the ability of shareholders to communicate during a proxy contest. Utilizing a sample of 361 shareholder-sponsored corporate governance issue proposals from 1991 to 1995, the article finds that the mean percentage of total outstanding votes cast in favor of an issue proposal declined significantly postreform. As explanation the article furnishes evidence that certain sponsors interested in their own private agenda rather than general shareholder welfare exploited more fully the proxy mechanism postreform; controlling for the composition of sponsors, the proxy reforms generated no significant change in the for-vote outcome of issue proposals. The article concludes instead that the reforms resulted in a shift in the composition of issue proposal targets toward companies relatively less vulnerable to such proposals prereform. Copyright 2000 by Oxford University Press.