Shareholder Voting Behavior and Its Impact on Firm Performance : a Configurational Approach

This research explores the influence of shareholder votes on corporate governance and firm performance within U.S.-listed companies. By exercising their right to vote, shareholders can express their approval or disapproval of corporate governance practices. To comprehensively examine the effects of shareholder votes, this study adopts a configuration approach that considers both the firm and shareholder perspectives. The analysis focuses on shareholder proposals as a key indicator of different configurations of shareholder voting strategies. Leveraging data from the S&P 500, the study uncovers several significant findings. Firstly, shareholder proposals pertaining to director incentives and monitoring demonstrate a positive association with high firm performance when supported by shareholders at the board of directors level. Secondly, the specific design of shareholder proposal configurations relating to director incentives and oversight significantly impacts firm performance, leading to varying outcomes of both high and low performance. Lastly, a congruence between shareholder-proposed director incentives and monitoring practices emerges as a key driver of high firm performance, while misalignment between these factors results in poorer performance. This research contributes to the governance literature by providing valuable insights into the configurations of shareholder proposals that yield high or low shareholder returns. Moreover, it introduces a typology of shareholder voting, shedding light on the diverse strategic approaches employed by shareholders to influence corporate outcomes. Furthermore, this study advances the understanding of strategic management and shareholder activism. By considering the combined effects of shareholder proposals, it offers explanations for the mixed results observed in prior research on single governance mechanisms. The research also addresses conflicts between shareholders and the firm, as well as among shareholders themselves, thereby providing valuable insights at the intersection of strategy and principal-agent theory