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Abstract

This paper examines how the means of disseminating proxy statements affects shareholder monitoring. I exploit the staggered implementation of a regulatory change that allows firms to switch from postal mail to electronic distribution. I estimate that electronic dissemination reduces total voting participation by about 1% to 2.2%. Under the plausible assumption that all shareholder non-participation is from retail investors, my results imply that retail investor voting non-participation increases by approximately 7% to 17% when electronic distribution is used. The reduction in retail investor participation shifts routine voting outcomes in favor of management’s recommendations and shift voting outcomes against management recommendation for non-routine votes. Consistent with management understanding the importance of dissemination channels, I further show management strategically uses its discretion over the choice of the proxy statement dissemination channel to affect voting.

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