Mitigating information imperfections in proxy contests: The effect of dissidents\u27 proxy solicitation

This study examines dissidents\u27 expenses related to proxy solicitation activities in a contested director election. I find that dissidents\u27 solicitation expenses are associated with higher chances of winning board seats. This association is consistent with my conjecture that dissidents extend their efforts in proxy solicitation and thus persuade more shareholders in dissidents\u27 favor, but this is not likely driven by retained solicitor\u27s reputation, dissidents\u27 opportunistic behavior for reimbursement, or other popular strategic activities in proxy contests. Furthermore, I show that proxy solicitation activities are considered to be an information channel that substitutes for investors\u27 own search for proxy statements from the SEC\u27s EDGAR. Overall, this study suggests that proxy solicitation plays an important role in proxy contests