Does the tone of shareholder proposals affect voting support? An empirical study⋆
We study the tone of shareholder proposals. Our goal is to understand whether and
how the supporting votes of proposals are associated with the tone of the proposal text.
We argue that the tone of proposals can provide shareholders with new information that
is relevant for their decisions of how to vote. We document that the voting support of
shareholder proposals is consistently associated with three dimensions of proposal tone.
Proposals receive higher voting support when they are more optimistic and have more
commonalities; voting support is lower when shareholder proposals are more readable.
We do not find consistent evidence that voting support is not associated with the tone of
management’s responses to proposals. Overall, our evidence adds to our understanding
of how texts filed during the shareholder proposal process can shape the voting outcome
of this process.