Retail shareholders and the efficacy of proxy voting: evidence from auditor ratification

Cory A. Cassell; Tyler J. Kleppe; Jonathan E. Shipman

doi:10.1007/s11142-022-09719-8

Retail shareholders and the efficacy of proxy voting: evidence from auditor ratification

Cory A. Cassell
, Tyler J. Kleppe
, Jonathan E. Shipman

Accountancy

Producción científica: Article › revisión exhaustiva

6 Citas (Scopus)

Resumen

We investigate the influence and implications of retail shareholder participation in the proxy voting process. Using the shareholder vote on auditor ratification—a setting which facilitates the identification of an informed vote—we find that, on average, shareholder votes against auditor ratification are not associated with audit failures but are strongly associated with investment performance. We next consider how these relations vary with the composition of a company’s voting base and find consistent evidence that the auditor ratification vote becomes less informed (i.e., associated with factors that do not reflect auditor performance) as retail ownership increases. In subsequent tests, we find that the probability of auditor dismissal is increasing in the proportion of votes against auditor ratification, and that this relation does not vary significantly with the proportion of shares held by retail investors. Collectively, our results suggest that some auditors are dismissed for factors not directly related to auditor performance.

Idioma original	English
Páginas (desde-hasta)	75-108
Número de páginas	34
Publicación	Review of Accounting Studies
Volumen	29
N.º	1
DOI	https://doi.org/10.1007/s11142-022-09719-8
Estado	Published - mar 2024

Nota bibliográfica

Publisher Copyright:
© The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2022.

Financiación

We thank Lakshmanan Shivakumar (the editor) and an anonymous reviewer for their important contributions to this study. We also thank Bright Asante-Appiah (discussant), Agnes Cheng, Lauren Cunningham, Marcus Doxey, Jeffrey Gramlich, Kathleen Harris, Rick Hatfield, Stacie Laplante, Blair Marquardt, Brian Mayhew, Robbie Moon, James Ohlson, Linda Parsons, Rob Pawlewicz (discussant), Austin Reitenga, Stephen Rowe, Quinn Swanquist, Terry Warfield, James Warren, and Robert Whited; conference participants at the 2018 AAA Annual Meeting, the 2018 Deloitte/University of Kansas Auditing Symposium, the 2018 European Accounting Association Annual Congress, the 2018 International Symposium on Audit Research, and the 2020 AAA Auditing Midyear Meeting; and workshop participants at Ball State University, the Hong Kong Polytechnic University, the University of Alabama, the University of Arkansas, the University of Massachusetts-Amherst, the University of Wisconsin-Madison, Washington State University, and Wichita State University for helpful comments and suggestions. We also thank Novia Chen and Peng-Chia Chiu for data on brokerage house closures and mergers. Cory Cassell gratefully acknowledges financial support from the Ralph L. McQueen Chair in Accounting at the University of Arkansas, and Jonathan Shipman gratefully acknowledges financial support from the Garrison/Wilson Endowed Chair in Accounting at the University of Arkansas.

Financiadores
Lakshmanan Shivakumar
University of Wisconsin-Madison
Wichita State University
State of Washington Water Research Center, Washington State University
Ball State University
University of Massachusetts Amherst
University of Alabama
Hong Kong Polytechnic University

ASJC Scopus subject areas

Accounting
General Business, Management and Accounting

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Retail shareholders and the efficacy of proxy voting: evidence from auditor ratification

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ASJC Scopus subject areas

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