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Exposure to Disengaged Retail Voters Thesis Formatted 05-02-2025 v21.42 MB
Embargoed Access, Embargo ends: 06/26/2027
Dissertation
Exposure to disengaged retail voters
University of Iowa
Doctor of Philosophy (PhD), University of Iowa
Spring 2025
DOI: 10.25820/etd.007809
Abstract
I examine how exposure to retail investors who do not participate in shareholder voting affects firms’ governance activities. This issue is important because most retail investors do not participate in voting due to the time, effort, and opportunity costs of voting. My analyses leverage decisions by Charles Schwab and TD Ameritrade to discontinue voting for routine proposals on behalf of retail investors who do not submit voting instructions. For firms in the top quartile of retail ownership, these decisions reduce the proportion of shares represented at shareholder meetings by 12.6%. This decline makes it more difficult for firms to achieve quorum and pass stock-related routine proposals. In response, firms attempt to increase retail investor voting participation by reducing processing costs associated with voting information. Firms with the strongest incentives to increase retail investor participation experience voting outcomes that diverge from management recommendations. Firm responses to the brokerages’ discontinuations vary based on financial constraints and monitoring quality, with some implementing governance mechanisms that increase management control over voting outcomes. My results highlight the challenges and costs associated with firm exposure to retail investors’ voting behaviors and are particularly relevant as such exposure is expected to increase.
Details
- Title: Subtitle
- Exposure to disengaged retail voters
- Creators
- Christian M Hutzler
- Contributors
- Dain Donelson (Advisor)Paul Hribar (Advisor)Cristi Gleason (Committee Member)Erik Lie (Committee Member)Jaron Wilde (Committee Member)
- Resource Type
- Dissertation
- Degree Awarded
- Doctor of Philosophy (PhD), University of Iowa
- Degree in
- Business Administration (Accounting)
- Date degree season
- Spring 2025
- DOI
- 10.25820/etd.007809
- Publisher
- University of Iowa
- Number of pages
- ix, 56 pages
- Copyright
- Copyright 2025 Christian M Hutzler
- Language
- English
- Date submitted
- 04/29/2025
- Description illustrations
- illustrations, tables, graphs
- Description bibliographic
- Includes bibliographical references (pages 33-36).
- Public Abstract (ETD)
- Most retail investors do not participate in shareholder voting due to the time, effort, and opportunity costs of voting. I examine what happens to companies when they are exposed to these investors’ voting behaviors. My analyses leverage decisions by Charles Schwab and TD Ameritrade to discontinue voting for routine proposals on behalf of retail investors who do not submit voting instructions. These changes led to a significant decline in the number of shares represented at shareholder meetings, making it more difficult for companies to meet voting requirements and approve certain proposals. In response, companies tried to be more proactive in encouraging retail investor voting, and some companies even introduced new ways to gain more control over voting outcomes. Companies with the strongest incentives to increase retail investor participation experience voting outcomes that diverge from management recommendations. My findings show that companies face real challenges and costs when fewer investors vote. My results highlight the challenges and costs associated with firm exposure to retail investors’ voting behaviors and are particularly relevant as such exposure is expected to increase.
- Academic Unit
- Tippie College of Business
- Record Identifier
- 9984831122302771
Metrics
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