Oğuzhan Karakaş
Cambridge Judge Business School
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CERF Fellow of Cohort 2024 - 2026
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Oracles of the Vote: Predicting the Outcomes of Proxy Contests
(With Scott Hirst and Ting Yu)
This paper examines proxy contests and the value of shareholder voting rights (i.e., voting premium) estimated using option prices. Our sample consists of 873 proxy contests for board seats from 1994 to 2017 where targets are U.S. publicly listed firms. We find that voting premium can help predict the outcomes of the proxy contests. Specifically, increased voting premiums around contest announcements is associated with higher likelihood of the subsequently settled or voted contests, as opposed to withdrawn contests. Further, the success of the dissidents achieving board seats at the voted contests increases with the voting premium around the record dates.
Project Updates
Project Updates
Phantom of the Opera: ETF Shorting and Shareholder Voting
Phantom of the Opera: ETF Shorting and Shareholder Voting
The short-selling of exchange-traded funds (ETFs) creates “phantom” ETF shares, trading at ETF market prices, with cash flows rights but no associated voting rights. Unlike regular ETF shares backed by the underlying securities of the ETF and voted as directed by the sponsor, phantom ETF shares are backed by collateral that is not voted. Introducing a novel measure of phantom shares both of the ETF and corresponding underlying securities, we find that increases in phantom shares are associated with decreases in number of proxy votes cast (for and against), and increases in broker non-votes, the vote premium, and value-reducing acquisitions.
Competition and the Value of Voting Rights
Competition and the Value of Voting Rights
We aim to examine the impact of product market competition on the value of shareholder voting rights (i.e., voting premium) for the US public firms. We will estimate the voting premium using option prices following the method introduced in Kalay, Karakaş, and Pant (JF-2014). We conjecture that competition will decrease the voting premium, which is a lower bound for private benefits of control. To establish the causal effect of competition on voting premium, we will exploit exogenous shocks to competition. We also plan to investigate the role of common ownership in the relation between competition and voting premium.
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