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Corporate Voting vs. Market Price Setting, 11 AMERICAN LAW AND ECONOMICS REVIEW 608 (2009)


This paper examines the relation between two means of corporate information aggregation—corporate voting and stock market pricing. If the median voter and the price-setting shareholder share similar information, then close proxy contest outcomes should not have systematic effects on stock prices. The paper shows, however, that close dissident victories cause positive movements in stock prices, while close management victories lead to negative price effects. The median voter values management control more than the price-setting shareholder. Voting and market pricing aggregate information in very different ways, with important implications for the role of voting and market pricing in corporate law.

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