Shareholder voting in mergers and acquisitions: evidence from the UK

This thesis consists of three empirical chapters examining shareholder voting on mergers and acquisitions (M&A). The sample of 362 M&A deals approved by shareholders of UK publicly listed companies from 1997 to 2015 is used to advance our understanding of the shareholder voting process under the UK regulations, the determinants of voting dissent, the consequences of such voting on M&A performance, and the relationship between corporate diversification and shareholder voting. Chapter 2 examines the determinants of voting dissent and impact of the recent financial crisis on the voting behaviour of shareholders. It is found that dissent on M&A resolutions is negatively related to bidder M&A announcement returns and positively related to shareholders’ general dissatisfaction towards the management. The results also indicate an increase in shareholder dissent after the 2007-2008 financial crisis. Chapter 3 investigates the consequences of shareholder voting dissent on M&As. It is found that voting dissent is an important predictor of the announcement returns of subsequent M&A deals. It explains market reaction to voting outcomes but has no relationship with post-M&A abnormal returns. This supports the notion that voting dissent is used by shareholders and prospective investors to infer the firm’s acquisition strategy and management ability. Chapter 4 addresses the issue of corporate diversification in relation to shareholder voting. It is widely accepted that managers pursue diversification strategies to benefit themselves leading to shareholder value destruction. This chapter examines whether shareholders can take part in diversification strategies of their managers by voicing their opinion through voting, and assess the value implications of proposed acquisitions. A positive relationship is found between measures of firm diversification and voting dissent. It is also found that shareholders vote against diversifying deals