Earnings and the Value of Voting Rights

Finance

Speaker:Oğuzhan Karakaş, University of Cambridge
Website: https://www.jbs.cam.ac.uk/faculty-research/faculty-a-z/oguzhan-karakas/
Date: Tuesday 7 November 2017
Time: 1.45 pm
Location: Pearson teaching room, Building: one

Further details

Abstract

We examine the impact of earnings announcements on the value of shareholder voting rights (i.e., voting premium) estimated using a new technique that exploits option prices. We find voting premium is negatively related to earnings surprises. This relation is primarily driven by unfavorable earnings surprises; strengthened with impending shareholder meetings, shareholder activist involvement, and analyst forecast dispersion; and attenuated when managerial incentives are aligned with shareholders, and assets are less tangible or generalizable. Variation in voting premium around earnings announcements predicts future exercises of control rights in firms, such as CEO turnovers, takeovers, and corporate restructurings.