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QUAECO-1406; No. of Pages 16 ARTICLE IN PRESS

The Quarterly Review of Economics and Finance xxx (xxxx) xxx–xxx

Contents lists available at ScienceDirect

The Quarterly Review of Economics and Finance

journal homepage: www.elsevier.com/locate/qref

Gender diversity on corporate boards: Evaluating the effectiveness of

shareholder activism夽
Mahdi Rastad ∗ , John Dobson
Department of Finance, Orfalea College of Business, California Polytechnic State University, San Luis Obispo, CA, 93407, United States

a r t i c l e i n f o a b s t r a c t

Article history: In this paper, we examine the effectiveness of shareholder activism as a change mechanism for improving
Received 19 June 2017 gender diversity on corporate boards. We provide evidence that shareholders use both internal pressure
Received in revised form through private negotiations that lead to a withdrawn proposal, and external pressure by submitting a
21 September 2020
proposal to vote in the annual shareholders’ meeting to draw public attention. While both are impactful,
Accepted 30 September 2020
we find that improvement in board gender diversity is more responsive to private negotiations than to
Available online xxx
social pressure. We also find that shareholders’ votes in favor of diversity proposals are higher when a
board is less diverse; but it’s the very existence of a proposal that matters and not how many votes it
JEL classification:
G38
receives. Finally, we find that proposals sponsored by institutional investors are more effective in bringing
J16 gender diversity to corporate boards.
M14 © 2020 Board of Trustees of the University of Illinois. Published by Elsevier Inc. All rights reserved.

Keywords:
Gender diversity
Gender diversity quota
Women on board
Shareholder activism
Board of directors
Corporate boards
Shareholder proposals
Social responsibility

1. Introduction
Since issues surrounding gender inequality came to the fore in
western societies in the 1960s, great strides have been made in
many aspects of women’s personal and professional lives (Harnois,
2008; Rampton, 2008; Heywood, 2006). Female involvement in the
general workforce, and in professions such as politics and law has
significantly increased (Collins, 2012). However, one area where
change has been notably slower is that of business, specifically, the
attainment of senior positions of power and influence in business
(Bertrand & Hallock, 2001; Schwartz, Dunfee, & Kline, 2005). While
female involvement at the level of junior and middle management
夽 We thank Heitor Almeida, Brian Ayash, Bradyn Breon-Drish, Carlos Flores, Math-
ias Kronlund, Mahdi Mohseni, George Pennacchi, Cyrus Ramezani, and participants
at Philosophy of Management Conference at Oxford University and California Poly-
technic State University seminar for helpful comments. All remaining errors are
ours.
∗ Corresponding author.
E-mail addresses: mrastad@calpoly.edu (M. Rastad), jdobson@calpoly.edu
(J. Dobson).
roughly reflects that in other sectors of the economy, the glass ceil-
ing remains firmly in place once the focus shifts to senior positions.
For example, in the case of the S&P 500, only about 5 % of senior
management positions are currently held by women, and this has
been the case for decades (Daily, Certo, & Dalton, 1999; Welbourne
& Andrews, 1996; Carter & Wagner, 2011; McIntyre, 2020; Stych,
2020).
In this paper we focus on another position of power and influ-
ence in business, namely that of membership in a company’s board
of directors. Corporate boardrooms have historically been, and con-
tinue to be today, heavily dominated by men (Adams & Funk, 2012;
Azmat & Petrongolo. 2014). And while there is general agreement
that this gender inequality is a problem, there is a marked disagree-
ment on how to pursue a solution (Kogut, Colomer, and Belinky,
2014; Ahern & Dittmar, 2012; Corinne Post & Kris Byron, 2015).
Interestingly – although perhaps not surprisingly – this disagree-
ment closely maps the broad EU versus US debate on the degree to
which government should intervene in business to promote social
change. In the current context of gender diversity, for example,
many European governments have imposed legal quotas which,
in essence, force diversity within the private sector, and the EU has

https://doi.org/10.1016/j.qref.2020.09.007
1062-9769/© 2020 Board of Trustees of the University of Illinois. Published by Elsevier Inc. All rights reserved.

Please cite this article as: Rastad, M., & Dobson, J, Gender diversity on corporate boards: Evaluating the effectiveness of shareholder
activism, The Quarterly Review of Economics and Finance, https://doi.org/10.1016/j.qref.2020.09.007
G Model
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M. Rastad, J. Dobson
plans to impose quotas across all 27-member countries in the near
future (Terjesen & Sealy, 2016; Isidro & Sobral, 2015).
But while the EU imposes strict legal quotas to force gender
diversity, the US continues to rely more on the endogenous mecha-
nism of shareholder-initiated board diversity resolutions (Perrault,
2015; The European Commission, 2012). An exception to this is
the state of California’s recent initiative SB 826 that requires some
board diversity; however, this legislated quota is already facing sig-
nificant legal opposition in the California courts while achieving
some success (Posner, 2020). Governments in the UK and US typ-
ically provide a passive regulatory shell while the achievement of
desirable societal ends is left to the ‘invisible hand’ of minimally
constrained market forces. In the US, for example, the Securities
and Exchange Commission (SEC) mandates that companies disclose
whether and how board diversity is considered in the board hiring
process1 . But this SEC disclosure requirement clearly falls far short
of, and is far less intrusive than, the mandated quotas imposed by
European governments. As such, evaluating the success of the US
approach to gender diversity yields valuable policy implications,
not only for corporate boards, but also for the general ability of
coordinated-versus-liberal forms of capitalism to successfully pro-
mote and achieve gender diversity.
Although superficially appealing, European board gender quo-
tas have raised a variety of concerns. These range from basic
practical questions (i.e., Do they work?), to more nuanced issues
such as their effect on women’s personal and professional sta-
tus, board quality, financial performance, etc. (Terjesen, Sealy, and
Singh, 2009). In this paper we recognize these concerns, and take
a closer look at the US non-governmental alternative to quotas,
namely board diversity resolutions brought by shareholders. We
ask if, as an alternative to quotas, shareholder resolutions on gender
diversity provide an effective mechanism for change in corporate
boardrooms. More specifically, we evaluate and compare the effec-
tiveness of two levels of shareholder activism: promoting change
via private negotiations with management that results in a with-
drawn proposal, versus building social pressure on management
that leads to a proposal going to vote at the shareholder annual
meeting. To find out, we track board structure in the years following
a diversity proposal to see if there have been any net improvements
in board diversity. In doing so, we answer a set of questions: Does
board diversity improve in response to shareholder proposals? If
so, how quickly are proposals implemented? Does the resulting
change differ for proposals that go to vote versus those that are
withdrawn from the voting process? Are diversity proposals with
greater voter support more likely to be implemented? Does it mat-
ter who sponsors the withdrawn proposals, versus the ones that go
to vote?
Superficially, it would appear that this endogenous shareholder-
resolution approach to board gender diversity has failed: the
vast majority of diversity resolutions brought by shareholders in
US-based companies fail to be formally adopted. For example, Flam-
mer’s survey of around 2,000 US companies – spanning the period
from 1997 to 2014 – identified a total of 79 shareholder proposals
promoting diversity on corporate boards (Flammer, 2015). But of
these 79 proposals, only 2 were approved by shareholders. These
high failure rates have led to a growing folk wisdom that the US
liberal approach is far less successful than the pro-active European
approach. The title of a recent editorial in the Financial Times reflects
this consensus: “Only the government can ensure women get on to
boards” (Gordon, 2016).
The results we present here, however, do not support the above
folk wisdom. We provide evidence to indicate that – although the
1
SEC Release No. 33-9089, December 16, 2009
2
The Quarterly Review of Economics and Finance xxx (xxxx) xxx–xxx
gender resolutions do indeed typically fail to be formally adopted
– they nonetheless have a positive significant future influence on
corporate board gender diversity. This influence may not be as
blatant and headline grabbing as government mandated quotas,
but in reality, it is quite impactful. In short, failed gender diver-
sity resolutions, brought by shareholders in US companies, are,
in fact, bringing about board gender diversity in liberal capitalist
economies the same way that mandated EU government quotas do
in coordinated capitalist economies. Thus, the evidence we present
here indicates that this ‘failure’ may actually lead to future success.
We find that, although the majority of board diversity resolutions
do indeed fail in terms of formal adoption, they nonetheless have
a positive future impact on board diversity. In particular, within a
year after a proposal goes to vote, 25 % of the proposals are imple-
mented. Similarly, but even more strongly, 40 % of proposals that
are withdrawn from the voting process are implemented within
a year, implying an agreement between the company and the pro-
posal sponsor. These implementation rates are substantially higher
when compared to firms that are never targeted by a proposal but
still increase diversity on their board for other reasons, or com-
pared to the implementation rates for other types of proposals2 .
Thus, regardless of whether proposals are directly voted down or
withdrawn before the vote, we find that these ‘failed’ resolutions
do, in fact, lead directly to greater future female participation on
corporate boards.
We next consider the effectiveness of withdrawn versus voted
proposals. Our difference in difference approach reveals that, with-
drawn proposals are more effective in bringing gender diversity to
corporate boards than are voted proposals; especially in the same
year as that in which a proposal is filed. We interpret these obser-
vations as reflecting a stronger and faster effect for withdrawn
proposals (the majority) as compared to voted proposals (Bauer,
Moers, & Viehs, 2015).
To study the effect of the magnitude of voter support and
sponsor characteristics, we re-estimate a modified version of the
difference in difference model for each case. The estimation results
indicate that voting results do not significantly change the likeli-
hood of implementation. Although not impactful, the board gender
diversity voting results reveal shareholders’ preferences. When
analyzing a subset of proposals that go to vote, we find that share-
holders’ votes in favor of diversity proposals are higher when a
board is less diverse and when a proposal is sponsored by an insti-
tutional investor or a member of the 30 % Coalition.3 Next, we
ask if a proposal’s impact varies by sponsor characteristics. Con-
trary to Marquardt and Wiedman (2016), we find that proposals
sponsored by institutional investors are more effective in bringing
gender diversity to corporate boards than those of other spon-
sors.
Our study is not the first to propose and empirically test share-
holder activism as a change mechanism for improving gender
diversity on corporate boards. We follow the lead of Marquardt
and Wiedman (2016) who also study the ability of shareholder
resolutions to improve board gender diversity. However, to our
knowledge this is the first paper that finds contrasting results in the
success of withdrawn vs. voted proposals. Marquardt and Wiedman
(2016) also provide empirical evidence that shareholder activism
increases board gender diversity but find no differential impact
2
See for example Thomas and Cotter (2007), Guo et al. (2008), Ertimur, Ferri,
Stubben et al. (2010), Cai and Walkling (2011), Ertimur, Ferri, Muslu et al. (2010),
Chidambaran and Woidtke (1999), Bauer et al. (2015), Barua et al. (2016), Armstrong
et al. (2013), Monks et al. (2004), Lee and Lounsbury (2011) and Baloria et al. (2013).
3
30% Coalition is an organization founded in 2011 that advocates for at least a
30% share of board seats for women in US public companies. For more information
see: http://www.30percentcoalition.org/.
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M. Rastad, J. Dobson
based on the motivation of the sponsors (i.e., financially vs. socially
motivated). Our study differs from Marquardt and Wiedman (2016)
in several respects. First, while Marquardt and Wiedman (2016)
focus on the sponsor’s motivation (i.e., social vs. economic), we
focus on different stages of activism (i.e., private negotiations that
lead to a withdrawn proposal vs. building social pressure by putting
a proposal to vote). We thus shed light on the nature and effective-
ness of these private negotiations between the shareholder activist
and management.
Distinguishing between these stages is important as suggested
by Ferri (2012). By distinguishing between withdrawn and voted-
on proposals, our results capture the increasing share of withdrawn
diversity proposals in recent years, from 50 % of all proposals in
1997, to 79 % in 2013 (Chidambaran & Woidtke, 1999). Moreover,
there seems to be a pattern in the negotiation dynamics of different
sponsors: institutional sponsors’ (pension and socially responsible
investment (SRI) funds) negotiations result in withdrawn proposals
relatively more frequently than do individual and religious spon-
sors’ negotiations. More importantly, we contrast the effect and
dynamics of withdrawn and voted proposals and find that the
impact of withdrawn proposals is stronger than that of voted pro-
posals. Finally, another distinctive feature of our study is that we
analyze the determinants of voting results and find that sharehold-
ers’ votes in favor of diversity proposals are higher when a board is
less diverse.
This study contributes to the broad literature on determi-
nants of board gender diversity (Terjesen and Sealy (2016). We
find that shareholder activism does indeed generate internal or
external pressure, leading to the addition of more female direc-
tors (Farrell & Hersch, 2005; Marquardt & Wiedman, 2016). We
also contribute to the growing debate surrounding board gen-
der quotas (Terjesen & Sealy, 2016; Balafoutas, Davis, & Sutter,
2016). As noted earlier, while the lack of female representation
in boardrooms is a problem both in the US and in Europe, the
two regions have chosen different strategies in tackling the prob-
lem (Ahern & Dittmar, 2012; Fichtl, 2013; Lansing & Chandra,
2012). We present new evidence in support of the endogenous
US approach of shareholder resolutions, documenting its effec-
tiveness as an alternative approach to the exogenous European
system of imposed quotas. Finally, we contribute to the broad lit-
erature on shareholder activism in general as a tool for corporate
governance. Various recent studies have examined the effective-
ness of shareholder activism in tackling governance and social
responsibility issues: examples include Ertimur, Ferri, and Muslu
(2010) and Cai and Walkling (2011) on CEO pay; Ertimur, Ferri, and
Stubben (2010) on board of directors’ responsiveness to proposals;
Armstrong, Gow, and Larcker (2013) on equity compensation plans;
Barua, Raghunandan, and Rama (2016) on auditor dismissals; and
finally, Guo, Kruse, and Nohel (2008) and Thomas and Cotter (2007)
on dropping anti-takeover measures. As for social responsibility
issues, Baloria, Klassen, and Wiedman (2013) study the effective-
ness of shareholder proposals on disclosures of political spending;
and Monks, Miller, and Cook (2004) and Lee and Lounsbury (2011)
study environmental issues. We contribute to this broad litera-
ture on shareholder activism by comparing the relative success of
withdrawn and voted proposals in improving gender diversity on
corporate boards.
The remainder of this paper is organized as follows. Section
1 reviews existing literature on shareholder activism and board
gender diversity and develops hypotheses regarding the relative
effectiveness of the different levels of shareholder activism. Sec-
tion 2 describes the data used in our analysis. Section 3 presents
an empirical analysis measuring the effectiveness of shareholder
proposals. The estimation results are reported in Section 4. The
issue of endogeneity is discussed in Section 5, and Section 6
concludes.
3
The Quarterly Review of Economics and Finance xxx (xxxx) xxx–xxx
2. Theoretical background and hypothesis
Given that the focus of our study is gender diversity resolu-
tions brought by shareholders in public corporations, we essentially
build on two broad streams of related research: that pertaining to
shareholder activism, and that pertaining to gender diversity. In the
case of shareholder activism, research focuses around the funda-
mental issue of corporate democracy, namely the extent to which
shareholders can overcome the agency conflicts inherent in the sep-
aration of ownership and control that lie at the heart of the modern
public corporation (Berle & Means, 1932; Jensen & Meckling, 1976).
In the case of gender diversity specifically gender diversity on the
boards-of-directors of public corporations – previous research falls
into two broad, but not mutually exclusive, categories: namely
those pertaining to the ethics of board diversity, and those pertaining
to the economic instrumentality of board diversity. By ‘ethics’ here
we mean the broad question of whether board diversity should
be pursued for philosophical or sociological reasons, regardless of
its effect on any economic measures of corporate worth. By com-
parison, the economic studies of board diversity are more prosaic,
focusing on the instrumental abilities of board gender diversity
to affect some measure of a corporation’s economic performance;
most obviously the effect, or lack of effect, on the company’s stock
price.
2.1. General impacts of shareholder activism
A central mechanism by which external shareholders can exert
influence over the management and governance of the corpora-
tion in which they own shares is their ability to submit resolution
proposals. Once submitted, these proposals are either voted on at
the next annual general meeting of the corporation, or they are
withdrawn by mutual consent of the share- holders submitting the
proposal and the respondent managers. Most diversity proposals
fall into the latter category and are withdrawn (Bauer et al., 2015;
Tkac, 2006). The majority of diversity proposals that do go to vote
end up failing to pass (Rojas, M’zali, Turcotte, & Merrigan, 2009).
Also, even if they do pass, they are non-binding on management.
In other words, even if a proposal does receive a majority approval
by shareholders, management is not legally obligated to act on this
proposal (Bauer et al., 2015). In light of this, how much influence do
shareholder resolutions actually exert on management’s internal
governance practices? Perrault (2015) argues that these resolutions
do indeed exert power over management: “when shareholders
file a resolution against a firm, they essentially question a firm’s
legitimacy, as such the process of shareholder resolution filing rep-
resents [a means by which] shareholders can significantly influence
the firm’s policies.”
In addition, Perrault observes that resolutions are important
embodiments of broad social changes about which firms need to
be aware: managers need to be aware of “issues that arise from
changing perceptions of legitimacy in regards to institutionalized
practices given emerging societal trends. [S]hareholders are quick
to grasp that their leverage is deeply anchored in a broad social
dimension, one that appeals to normative ideals and is conveyed
through moral language.” So, the longer-term influence and impli-
cations of shareholder resolutions may be broad and not easily
quantified.
However, several recent studies have attempted to quantify
the influence of shareholder resolutions in a variety of cate-
gories. Although the literature is not extensive, recent empirical
studies have investigated the impacts of shareholder resolutions.
Most studies focus specifically on either withdrawn resolutions
(Chidambaran & Woidtke, 1999; Bauer et al., 2015), or those that
go to vote (Ertimur, Ferri, Stubben et al., 2010; Guo et al., 2008;
Thomas & Cotter, 2007; Cai & Walkling, 2011; Ertimur, Ferri, Muslu
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M. Rastad, J. Dobson
et al., 2010). The general conclusion is that withdrawn proposals
are significantly more successful (Rojas et al., 2009). For example,
in a study of proposals relating to corporate disclosure practices,
Baloria et al. (2013) find that only 8 % of proposals that go to
vote are eventually implemented, whereas in the case of with-
drawn proposals the implementation rate is a much healthier 56 %.
These percentages, however, may understate the long-term impact
of shareholder proposals. For example, as Ferri (2012) points out,
in its endeavors to identify areas for future legislation, the SEC
monitors all proposals, regardless of whether they are internally
implemented by management. Similarly, Baloria et al. (2013) note
that over their sample period, some 80 % of firms adopting corpo-
rate disclosure policies did so after receiving a shareholder proposal
within the previous 12 months; thus, indicating a lagged effect of
‘failed’ shareholder proposals (more on this later). Thus, even failed
proposals, if they are numerous, could lead to internal action on the
part of management, or external regulatory action on the part of
the SEC or other government agencies. As we will see, this fact has
particular relevance to our study of gender diversity resolutions. As
Flammer (2015) points out: “proposals may be ‘symbolic’ in nature.
Shareholders submit them not so much because they expect the
proposals to pass but rather to bring social issues to the attention
of management and the public.”
What issues are most commonly addressed in shareholder pro-
posals? A recent study by Baloria et al. (2013) examine some 12,000
shareholder proposals submitted to S&P 1500 firms between 1997
and 2009. They find that, not surprisingly, almost half the proposals
relate directly to issues of corporate governance such as executive
and non-executive (i.e., board member) hiring practices (48 %). Also,
not surprisingly, some 21 % relate directly to executive compensa-
tion; while the remainder relate to ‘social’ issues such as charitable
contributions, global climate change, labor standards, pay disparity,
and sustainability reporting.
Resolutions directly addressing the issue of board gender diver-
sity are trending upward in popularity (Bauer et al., 2015; Rojas
et al., 2009). Furthermore, although these gender resolutions are
typically brought by relatively peripheral shareholder groups such
as CSR advocates or religious organizations, they are often later
adopted by larger institutional investors who wish to cham-
pion trending societal trends (Gillan & Starks, 2007; Johnson,
Daily, & Ellstrand, 1996). For example, these observations lead
Perrault (2015) to conclude that “proposals requesting board
gender diversity are [increasingly] powerful instruments of insti-
tutional change”.
In summary, to what extent is corporate democracy facilitated
through shareholder resolutions? The above evidence indicates
that shareholder resolutions are indeed an effective tool through
which shareholders have a voice in corporate governance. The fact
that most resolutions are withdrawn or, if they do go to vote, fail to
pass in no way means they are unimportant. As we will see below,
this fact has particular resonance in the case of gender diversity
resolutions.
2.2. Methods for achieving board diversity
Turning to the specific case of shareholder diversity resolutions,
Perrault (2015) observes: “Not only does the publicity surrounding
the resolution disrupt the status quo, it also focuses attention on
those marginalized or under-represented groups who are already
within the corporate hierarchy.” Thus, by excluding or ignoring
women directors, the firm in essence propounds an impoverished
and biased ethical outlook. As such, managers and regulators have
a social responsibility to promote gender equality in-and-of itself
(Burke, 2000; Singh, 2001; Ingley & Walt, 2003).
What avenues are available to shareholders to ensure that man-
agement pursue gender diversity? Filing a shareholder resolution
4
The Quarterly Review of Economics and Finance xxx (xxxx) xxx–xxx
is essentially a mechanism to give voice to shareholders to put
pressure on management for a change. There are two typical out-
comes: a withdrawn proposal (WP), or a voted-on-proposal (VP).
In fact, filing a proposal is not the first step by activist investors
seeking a change in their portfolio companies. Prior to filing a pro-
posal, some activists first request governance changes via letters
in direct engagement with the firm (private negotiations). When
those requests fail, they then resort to filing proposals, which in
turn can be withdrawn before the vote. Consider the example of
CalSTRS: “In a similar effort, CalSTRS recently submitted 125 letters
to boards at California corporations whose boards had no women
directors; in response, 35 of the companies appointed female board
members. CalSTRS has indicated that if its private approaches are
unsuccessful, it will proceed with shareholder proposals.” Similar
statements are provided in Table A1 in the Appendix. The table
includes statements by asset management and pension fund insti-
tutions, which indicate that they begin their engagement activities
with private contact with the company and a direct dialogue with
senior management or board of directors. These statements indi-
cate that, only if the direct dialogue fails, would they move forward
with filing a proposal as the next step. For example, Walden Asset
Management describes their corporate governance policy on their
website as “In cases where companies are not sufficiently respon-
sive or where dialogue breaks down, we are able to take our
concerns directly to other shareholders through the shareholder
resolution process.”
Thus, the activist’s decision to target firms with shareholder pro-
posals is not random. Intuition suggests that diversity proposals
must be more frequently used where the issue is more severe, i.e.,
in firms with less gender diversity. This observation leads to our
first hypothesis:
Hypothesis 1. Companies that are targeted by diversity proposals
are more likely to have no woman on the board or are generally less
gender-diverse.
To provide more texture about the effect of withdrawn pro-
posals, we collect more information about the circumstances
surrounding withdrawn proposals using public disclosures and
media coverage of the terms of agreement between the proponent
and the firms. We present examples of company statements that
explain the reasoning behind a withdrawal decision in Table A3
in the Appendix. The table includes disclosures by asset manage-
ment and pension fund institutions that explicitly state that the
withdrawal decision was the result of specific diversity enhancing
actions taken by the firm. Examples of such actions include appoint-
ing a woman to the board, showing their commitment to enhance
board diversity by amending their bylaws, and enhancing disclo-
sures in the proxy statement or creating explicit processes to ensure
diversity is a search criterion when hiring directors. For example, on
6/3/2003 Businesswire reports Calvert Asset Management’s state-
ment on the Modex Corporation: C̈alvert withdrew its shareholder
resolution asking the company to bring race and gender diversity
to its board of directors after Molex appointed the first woman to
its board.F̈or more examples see Table A3 in the Appendix. The
evidence therefore suggests that the proponents withdraw their
proposals after reaching an agreement with the firms in their pri-
vate negotiations.
As discussed earlier, previous studies both on gender diversity
in particular, and shareholder activism in general, have found dis-
tinct differences in outcome based on whether a proposal ends up
going to vote or is withdrawn. Whether the proposal is withdrawn
or voted upon depends on the outcome of the negotiation with
the firm and the firm’s willingness to have a vote. When lobbying
internally for a change via private negotiations with management
(Bauer et al., 2015) is successful, the proposal is withdrawn by its
sponsor and therefore does not go to vote. However, when those
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M. Rastad, J. Dobson
private negotiations fail the proposal is put to vote to exert social
pressure on management by drawing public attention to the sub-
ject (Rojas et al., 2009). Having said that, it is important to note
that successful private negotiations is not the only reason for with-
drawal. A proposal may be withdrawn due to reasons other than its
adoption (e.g. some other concession to the proponent). As such,
as a crude signal, a WP indicates the reaching of a compromise
between management and shareholder activists, whereas VP’s are
a sign of negotiation failure that leads to publicizing the subject
(Chidambaran & Woidtke, 1999). That is, a WP is often viewed as
a ‘success’ because it implies that the resolution proposers were
able to pressure management into acquiescing on at least some
aspects of the resolution. As Tkac (2006) observes, a withdrawal
resolution usually signals some type of action on the part of the
corporation: dialogue, agreement to resolution, or some other com-
promise. Withdrawal [WP] can be viewed as indicating some level
of success. These observations lead to our second hypothesis:
Hypothesis 2. While both VP’s and WP’s are positively associated
with subsequent improvements in gender diversity on corporate
boards, WP’s are more effective.
Furthermore, we investigate whether the magnitude of the
shareholders’ support matters or not. We ask, for diversity resolu-
tions that do go to vote, how important is the outcome of that vote?
Even though, as discussed above, the vote will likely fail to gain a
majority, is the size of the loss important in terms of achieving sub-
sequent improvements in diversity? This question concerning the
size of the vote, whether won or lost, leads to our third hypothesis:
Hypothesis 3. The more votes a VP receives; the higher the like-
lihood of its effectiveness in terms of achieving board diversity.
When private negations fail, and management has no hesita-
tion, a proposal goes to vote in an annual shareholders meeting.
We next ask what are the determinants of the voting results? Does
the type of proposal, board and governance characteristics, or past
performance impact the voting outcome? For example, are share-
holders sensitive to the current gender diversity level of a board
when casting their vote? Or does the voting result depend on who
the proposal sponsor is? More formally:
Hypothesis 4. Diversity-related proposals tend to receive more
supportive votes in annual meetings (a) in firms with less gender
diversity, and (b) when the proposal is proposed by an institutional
sponsor or a sponsor with more public visibility (i.e., the members
of the 30 % coalition).
We follow Marquardt and Wiedman (2016) in recognizing a
distinction between different types of proposer. They attempt to
dichotomize proposers on the basis of motivation – socially moti-
vated, versus financially motivated – but they fail to find any
impact differential. This is perhaps not surprising given that their
categorization is somewhat arbitrary when “motivations cannot
be observed directly”; e.g., all individual proposers are socially
motivated, whereas all institutional investors (even SRI funds) are
financially motivated. However, here we address this difference in
terms of the relative power of the proposer as an effective agent
for change. The initiators and filers of diversity proposals can vary
broadly, from individuals and small focus groups to large reli-
gious organizations, SRI funds, and pension funds. In terms of the
likelihood of success from the proposal, is the originator impor-
tant? Which sponsors are more influential in private negotiations
in building social pressure? Earlier studies (e.g., Chidambaran and
Woidtke (1999) and Bauer et al. (2015)) and the analysis in Table 1
in the next section suggest that proposals sponsored by institu-
tional investors are more likely to be withdrawn, and therefore
these investors may be more influential using private negotiations.
These questions lead to our fifth hypothesis:
5
The Quarterly Review of Economics and Finance xxx (xxxx) xxx–xxx
Table 1
Frequency of Proposals by Sponsor Type and Out.
(1) (2) (3) (4) (5)
Sponsor Type Voted Withdrawn Omitted Not Filed Total
Individual 6 3 4 1 14
Public Pension Fund 7 12 0 1 20
Religious Organization 39 49 2 4 94
SRI Fund 18 50 1 5 74
Union 0 1 0 0 1
All Proposals 70 115 7 11 203
This table presents the outcome frequency for shareholder proposals on board gen-
der diversity classified by the sponsor types (individual sponsor, public pension
fund, religious organizations, SRI funds and unions) between 1997 and 2013. Poten-
tial outcomes for a proposal is either to go to vote (column 1), to be withdrawn
(column 2), to be omitted (column 3), or not to be filed (column 4).
Hypothesis 5. Proposals sponsored by shareholders with stronger
private negotiation skills, i.e., institutional investors, are more suc-
cessful than those sponsored by other investors.
3. Data and empirical strategy
Shareholder proposals are matters raised by shareholders of
public companies to be voted on in an annual shareholder meeting.
Under SEC Rule 14a-8, a shareholder must own the equivalent of
at least $2000 value or 1 % of the company shares (whichever is
smaller) to be eligible to submit a maximum of one proposal per
meeting. In response, the company has three options: (1) to let the
proposal go to vote by including it in the company’s proxy state-
ment (form DEF 14a); (2) to withdraw the proposal by reaching an
agreement with the proposal’s sponsor; and (3) to try to exclude the
proposal by submitting a “no-action” request to the SEC. Depend-
ing on the facts and circumstances set forth in the request, the SEC
staff may or may not grant a “no-action” letter to exclude a proposal.
Even if the proposal ultimately goes into the proxy statement and
receives a majority vote, it is still non-binding. Despite this fact, as
summarized by Baloria et al. (2013), previous studies suggest that
shareholder proposals work as a mechanism to give shareholders
a voice for change. Consistent with this view, in what follows, we
provide evidence that shows the diversity proposals do provide a
mechanism for change.
We use two databases from Institutional Shareholder Services
(ISS) to obtain data on the structure of boards of directors and
shareholder proposals. The Directors database provides data on the
number of directors on a given board, and their characteristics such
as age and gender4 . The Shareholder Proposals database provides
information about the proposals that a company receives from its
shareholders each year. Among all types of proposals related to cor-
porate governance and corporate social responsibility we focus on
diversity-related proposals. To add companies’ financial data, next
we merge the ISS datasets with COMPUSTAT database.
Our main sample consists of 150 companies that received 203
diversity-related proposals between 1997 and 2013. Both gen-
der diversity and racial/minority diversity concerns are raised in
virtually all the diversity-related proposals for which the proxy
statement (form DEF 14a) is available on the SEC website.
3.1. Analysis of the content of proposals and board responses
We review all 70 proxy statements related to diversity proposals
that go to vote available on the SEC website. A typical diversity
4
For directors whose gender is missing from the ISS database we use the name
files on the Census Bureau website to determine their gender based on their first
names. The name files are available on their website, here: http://www.census.gov/
topics/population/genealogy/data/1990census/1990censusnamefiles.html.
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proposal includes two sections: the requests by the shareholders
sponsoring a proposal, and the board’s response containing voting
recommendations.
The first section includes a list of concrete actions shareholders
want the board to take. This typically includes asking the board to
routinely include women and minorities in the pool of candidates
for board seats, publicly committing to a policy of board inclu-
siveness, providing a timeline for implementing the policy, and
reporting by a pre-set deadline on the board’s efforts to encour-
age diversified representation on the board. The language used in
these cases is quite straightforward, as the shareholders consider
it “necessary for corporations to abandon the cozy clubbiness that
has all too often characterized boards in the past. . . in order to
enhance the independence, accountability and responsiveness of
corporate boards.” The proponent of a proposal usually cites aca-
demic research advocating for more gender diversity on corporate
boards, or makes reference to the success of other companies who
have adopted diversity policies and have committed themselves
to the ethics of inclusion in governance. In summary, all proposals
are either directly asking companies for a more diverse board by
making sure their pool of candidates is diverse, or indirectly asking
them by requiring them to commit to a policy and a timeline that
results in board inclusiveness. Therefore, we consider a proposal to
be implemented when ultimately a female director is added to the
board.
The second section includes the board’s recommendation to
shareholders to vote for or against the proposal. Not surprisingly,
the board recommends a vote against the proposal in all 70 cases.
This is due to the fact that if the board agreed with the proposal, it
would have been adopted and thus withdrawn. The very fact that
there is a vote indicates that the board opposed the proposal, so
obviously it also recommends against it (see Ertimur, Ferri, Muslu
et al., 2010). The board’s recommendation is usually justified by
emphasizing commitment to the unbiased search criteria of using
a nominating process designed to identify the best possible nomi-
nees for the board regardless of gender, racial background, religion,
or ethnicity. Moreover, they argue that the methods requested in
the proposal are too restrictive in general, and implementing the
requirements set forth in the proposal would add administrative
burdens and costs, without necessarily resulting in the selection of
the best director candidates for the company.
Calvert Asset Management Company, an SRI fund with 55 propos-
als, and the Interfaith Center on Corporate Responsibility (ICCR)
with 43 proposals. Together these two entities account for nearly
half of the diversity-related proposals. This shows that the push for
more diversity in corporate boards is coming mainly from religious
and socially responsible institutions in the US. Moreover, similar to
findings by Chidambaran and Woidtke (1999), Bauer et al. (2015)
and Baloria et al. (2013), we also find a higher likelihood of a pro-
posal withdrawal for institutional investors. Given that a proposal is
withdrawn only if its sponsor and the company reach an agreement,
this can be interpreted as stronger negotiating power for institu-
tional investors compared to individual investors. Table 1 shows
that the probability of withdrawing a proposal for SRI funds and
pension funds is 68 % (= 50/74) and
60 % (= 12/20) respectively, whereas it is only 21 % (= 3/14) for
individual sponsors. Religious organizations stand somewhere in
between with 52 % (= 49/94) withdrawal likelihood.
3.3. Sample selection
Are targeted boards different from non-targeted boards? Table 2
answers this question by contrasting board characteristics of the
companies targeted by shareholder proposals versus all the com-
panies for which Institutional Shareholder Services provides data.
The two samples have very different board structures. Targeted
companies have 40 % larger boards, with an average board size
of 9.2 members versus 5.51 for all companies. In targeted boards,
the directors are slightly older and have slightly more director-
ship positions outside the company. Not surprisingly, the targeted
boards are less diverse. 54 % (= 1–46 %) of targeted boards are all-
male boards, whereas this number is 38 % (= 1–62 %) for all the US
companies that are not targeted. As an alternative measure, while
the percentage of the corporate board seats allocated to women in
the entire sample is 10 %, it is only 6 % in targeted companies.
In summary, targeted boards are larger, older and strictly less
diverse. Because of these differences we use a propensity score
matching algorithm to carefully select a control group that mir-
rors the characteristics of the targeted (treated) firms. By picking
firms in our control group which are similar to the firms targeted
by diversity proposals, we will make sure that this is a balanced
comparison.

3.2. Sponsor type and proposal outcome

4. Empirical analysis
As illustrated in Table 1, 70 out of the total 203 proposals were
4.1. Voting results
put to vote, and only one proposal passed. In 115 cases, the pro-
ponent of the proposal and the company reached an agreement
If the success of diversity proposals is measured by whether
before the proposal was put to vote and therefore was withdrawn.
they received enough votes to pass, it looks like almost every case
The remaining
was a failure. The last row of Table 3 shows that except for one
18 proposals were either not filed or were omitted, meaning that
proposal that marginally passed with 50.7 % votes, no other pro-
they were allowed by the SEC to be excluded from proxy materials
posal passed the 50 % passage threshold. Classifying the proposals
because they did not qualify to go to vote under the exchange act
based on their sponsor in reveals that proposals put forth by SRI and
rule of 14a-85 .
pension funds on average received significantly more votes (23.8
Table 1 also presents the frequency of proposals by proponent
%) compared to religious organizations (16.7 %) and individuals (9
type and proposal outcome (i.e., whether it went to vote, was with-
%). This is another piece of evidence consistent with the view that
drawn, omitted or not filed). We use ISS classification for proponent
institutional investors have more negotiation power, which is at
type: individual sponsors, public pension funds, religious orga-
least partially due to the larger size of those investors.
nizations, Socially Responsible Investment (SRI) funds, and labor
Based on the voting results in Table 3 it may seem that gen-
unions. More than 92 % of proposals are put forth by non-individual
der diversity related proposals are not an effective reform channel
sponsors of which 46 % are religious organizations, 36 % are SRI
because they almost never pass. If this is the case, there must be
funds and 10 % are public pension funds. Two proponents play a
no impact on the gender diversity of targeted boards following a
dominant role in terms of the number of proposals they sponsor:
proposal. However, if what matters is just raising shareholders’
diversity concerns through shareholder activism and putting for-
ward a proposal– and not the fact that it passed or failed – one
5
See Boylan, Cebula, Foley, and Liu (2014) for an analysis of omitted proposals. would expect an improvement in board diversity as a result of the

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Table 2
Comparison of Board Characteristics in Targeted vs. All Boards.

Targeted Companies All Companies

Variables N Mean Median SD N Mean Median SD Diff

Board Size 1494 9.2 9 2.74 31194 5.51 5.48 3.35 3.7***
Average Age 1494 61.06 61 4.21 31193 60.26 60.55 4.78 0.79***
Average No. of Outside Boards 1494 0.89 0.8 0.61 27823 0.83 0.75 0.65 0.06***
Share of Female Directors 1494 0.06 0 0.08 31194 0.1 0.1 0.1 −0.03***
Any Women on Board 1494 0.46 0 0.5 31194 0.62 1 0.49 −0.16***

This table presents the summary statistics and contrasts the characteristics of boards that are targeted by a gender diversity proposal vs. all boards between 1997 and 2013.
The unit of observation is at the firm/board level. Significance at the 10 %, 5 %, and 1 % levels is indicated by *, **, and ***, respectively.

Table 3
Voting Results by Sponsor Type.

Sponsor Type N Mean SD Min Quantile#1 Quantile#2 Quantile#3 Max

Individual 6 9.0 4.7 5 6 7.5 10 18

Public Pension Fund 7 23.8 14.9 7 7.8 24 29 50.7
Religious Organizations 39 16.7 11.3 3 10 12 20 48
SRI Fund 18 23.8 9.6 6 16 25.9 29 39
Total 70 18.6 11.6 3 10 15 27.9 50.7

This table shows the distribution of shareholder votes in annual meetings, classified based on the identity of the proposal sponsor, on gender diversity proposals that are
filed between 1997 and 2013.

proposal, even if it fails. In the remainder of the paper, we study the Table 4
Analysis of Target Firms.
effectiveness of this channel by examining the diversity changes on
company boards by conducting analysis of proposal implementa- Dependent Variable: Target
tion rates, an unconditional analysis of the introduction of female
(1) (2) (3)
directors to all male boards, and a similar conditional (regression)
Any Women on Board −0.953** −1.245***
analysis.
(0.01) (0.00)
% of Women on Board −5.242** −6.372**
4.2. Choice of control group (0.03) (0.02)
Board Size 0.113*** −0.053
(0.00) (0.18)
To pick our control group, we could consider all the universe of
% of Independent Directors −0.537 −0.857*
boards covered by ISS. However, as Table 2 shows, non-targeted (0.16) (0.07)
boards are drastically different from targeted boards. Therefore, a Average Age of Directors 0.021 0.011
potential concern is that being targeted by diversity proposals can (0.18) (0.58)
be driven by observable and even unobservable factors and there- ROA 2.081*** 2.890***
(0.00) (0.00)
fore can be endogenous to the gender diversity. We try to mitigate Log(Assets) 0.385*** 0.627***
this effect by picking a control group that is chosen using propensity (0.00) (0.00)
scoring matching algorithm. Therefore, we estimate a Logit model Tobin’s Q 0.006 0.086**
to characterize the determinants of being targeted by shareholder (0.22) (0.04)
Capex 3.488*** 3.199***
proposals. More formally, we estimate
(0.00) (0.00)
Constant −5.421*** −8.487*** −8.682***
Pr(Target)it = ˚(ˇ0 +ˇ1 AnyWomanonBoardit
(0.00) (0.00) (0.00)
+ˇ3 PercentageofWomenonBoardit +ˇ5 X it +ˇ6 Z it +t +εit ) (1) R2 0.0588 0.0656 0.1451
N 28206 28154 16882
where  is the cdf of normal distribution, the dependent variable, This Table presents the estimation results for the Logit model in Eq. (2) for the
Target, is an indicator variable that switches on when a firm is tar- companies that were targeted by gender diversity proposals at least once between
geted by a diversity proposal. The independent variables are board 1997 and 2013. The dependent variable, Target, is an indicator variable that switches
on when a firm is targeted by a diversity proposal. The independent variables are
and firm characteristics. Any Women on Board is an indicator vari-
board and firm characteristics. Any Women on Board is an indicator variable that
able that switches on when there is at least one female director on switches on when there is at least one female director on the board. % of Women on
the board. % of Women on Board is the fraction of board seats that Board is the fraction of board seats that are assigned to women. Board Size is total
are assigned to women. We use both Any Women on Board and % of number of directions on a board. % of Independent Directors is the fraction of the board
Women on Board, although both measure board gender diversity. members that are independent. Average Age of Directors is the arithmetic mean of
directors’ age. Firm characteristics include ROA; return on assets, Log(Assets); firm
Note, the latter is a continuous variable capturing the degree of
size, Tobin’s Q; the ratio of firm’s market value of equity to its book value, Capex; the
board diversity whereas the former is an indicator variable captur- ratio of investment in capital expenditure to total assets. All specifications include
ing whether or not there are any woman on board. This is because year fixed-effects. Standard errors are clustered at the firm level. *, **, and *** denotes
the majority of US firms have no women on their board which cre- significance at the 10 %, 5 %, and 1 % level, respectively.
ates a discontinuity in percentage of women on board. Variables
X and Z are control variables for firm and board characteristics
described in Table 4. less diverse, measured by the percentage of women on their board,
Estimation results are reported in Table 4. In column (2) we and more likely to have no women on their board. Switching to
observe that firms that are targeted by diversity proposals are other board characteristics, although not statistically significant,
larger, measured by log of asset size, more profitable and have the direction of the estimation result suggests that firms with
higher levels of capital expenditures. More importantly, columns younger and more independent directors are less likely to be tar-
(1) and (3) show that the board of directors of targeted firms are geted. This is perhaps because those boards are less likely to have a

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M. Rastad, J. Dobson
cozy ‘clubiness’ environment and therefore are less need of a female
director to break such an environment. Therefore, our findings sup-
port Hypothesis 1. It is interesting to note that although in column
(1) the positive and significant coefficient on board size may seem
to suggest that larger boards are more likely to be targeted by diver-
sity proposals, it loses its significance when we add other controls in
column (3); especially the log of assets. This is because larger firms
(especially S&P 500 firms) are more likely to receive shareholder
proposals, and larger firms have larger boards.
We use the result of this model to estimate a propensity score
(the probability of being targeted by a diversity proposal), which
we use to select companies for our control group. For each targeted
firm we pick a matched company from the non-targeted pool of
more than 15,000 observations from a merged COMPUSTAT and ISS
dataset. We achieve this by finding a company that has the closest
propensity score to the targeted company’s propensity score in the
same year. This results in losing 60 observations and reduces the
total sample to 143 matched proposals.
4.3. Implementation of proposals
The simplest way to evaluate the effectiveness of shareholder
proposals is to track what percentage of proposals is implemented
in subsequent years. We mark a proposal as implemented if a
female director is added to the board following a proposal. To do
this, we match the proposal database with board structure data in
the following 2 years to study the potential changes in board diver-
sity after a proposal. Table 5 shows the implementation rates across
different outcomes. The last row of panel A of the table shows that
overall, out of 143 matched diversity proposals, 11.9 % are imple-
mented in the same year and 23.1 % in the next year, which adds
up to an average implementation rate of 35 % in a two-year win-
dow. This ratio is close to the higher end of implementation rates
that other studies have found for different types of proposals, espe-
cially given that diversity proposals almost never pass. For example,
Baloria et al. (2013) report 20 % implementation rate for political
spending proposals, and Ertimur, Ferri, Muslu et al. (2010) report a
5.3 % implementation rate for pay-related proposals, and 40 % for
majority vote proposals.
The proposals that are omitted by the SEC or not filed, as well
as withdrawn proposals, have the highest implementation rates of
46.7 % and 39.5 % respectively; this is followed by proposals that
are voted on, with a 25 % implementation rate. Except for voted
proposals that take a year to be implemented, the implementation
for other proposals begins in the same year and continues in the
subsequent year. Although not reported in Table 5, we find that
absent any proposal there is still an upward trend in the number
of companies adding a female director to their board among non-
targeted companies, with 8 % of companies allocating more seats to
female directors each year; a total of 16 % in two years. This suggests
that any impact analysis must compare board diversity improve-
ments to a benchmark (control group) that reflects the trend in the
absence of proposals (counterfactual). This is exactly why we used
the propensity score matching method to choose the control group.
Comparing the last column of Table 5 indicates that the percentage
of companies that add a female director to their board for targeted
companies is significantly higher than for non-targeted companies.
In a two-year window, the implementation rates in targeted com-
panies for voted, withdrawn and other proposals are 25 %, 39.5 %6
and 46.7 % respectively, rates that are significantly higher than the
16 % rate for non-targeted firms.
6
The fact that implementation rate for withdrawn proposals, 39.5%, is less than
100% is consistent with our earlier observation that successful private negotiation
that results in adoption of a proposal is not the only reason for a withdrawal.
8
The Quarterly Review of Economics and Finance xxx (xxxx) xxx–xxx
Fig. 1. The Effect of Filing a Diversity Proposal on Board. The sample includes firm-
year observations in Directors database from ISS for which its Shareholder Proposals
database shows at least one gender diversity proposal between 1997 and 2013. The
figure presents the cumulative proportion of companies that add a female director
in each of the targeted treatment (squares) and control (circles) groups starting in
t=−1, where t = 0 is the year in which a proposal is filed and treatment is defined as
being a target of a gender diversity proposal.
4.4. Graphical analysis
To discuss the empirical results related to Hypothesis 2, we
begin by visualizing the pattern of trends in board gender diversity.
We compare the dynamics of board diversity in targeted vs. non-
targeted companies following a proposal. More specifically, we ask:
does putting forward a diversity proposal (regardless of whether it
passes or not) improve the likelihood of female representation on
the board? To answer this question, we split the sample in each
year assigning those companies with a diversity proposal as the
treatment group and those with no diversity proposal as the con-
trol group. We start our graphical analysis by examining the pattern
for all diversity proposals in Fig. 1.
If filing a proposal is effective in improving corporate board gen-
der diversity, one would expect to observe an increase in gender
diversity on boards that are targeted by those proposals, relative
to boards that are not. This is exactly the pattern we find in Fig. 1.
We compare the percentage of companies in each of the treatment
(targeted) and control (non-targeted) groups that add at least one
female director. This number represents the likelihood of adding at
least one female director to the board in each group. The dashed
line in Fig. 1 shows an overall increase in the fraction of firms in
the control group that add a female director, from 2 % in the year
before a proposal is filed to 24 % after 3 years, an annual increase of
5.5 %. Even more strongly, the proportion of the firms in the treat-
ment group that add a female director increases from 0 in the year
before a proposal is filed to 42 % after 3 years, an annual increase of
10.5 %. This finding is consistent with Hypothesis 2. It suggests that
in a 3-year window, filing a diversity proposal is associated with
an increase in the proportion of diversity enhancing companies of
19 % (= 42 % - 24 %) with no reversal pattern. This is a significant
increase of about 80 % when compared to the baseline of 24 % for
non-targeted firms.
In summary, consistent with Hypothesis 2, a simple difference
in difference comparison suggests that diversity proposals indeed
improve gender diversity on corporate boards. The empirical evi-
dence above suggests that both withdrawn and voted proposals
increase the likelihood of having at least one woman on a corporate
board. Finally, note that this result is an unconditional compari-
son. A more rigorous result based on multiple regression analysis
is presented in the next section.
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M. Rastad, J. Dobson
Table 5
Implementation Rate of Proposals.
Outcome Total Number of Proposals Percent Implemented at t
Proposals Voted on 52 1.9 %
Proposals Withdrawn 76 15.8 %
Proposals with other Outcomes 15 26.7 %
All Proposals 143 11.9 %
This table presents the implementation rate for shareholder proposals on gender diversity between 1997 and 2013 in t and t + 1, where t is the year at which the proposals
is filed. Implementation here is defined as adding a female director to the board. Implementation rates are compared across different proposal outcomes (voted, withdrawn
and omitted/not filed).
5. Estimation results
To examine Hypothesis 2 more formally, we present the esti-
mation result for proposals that are put to vote and proposals that
are withdrawn all in one model.
5.1. Baseline results
Table 6 presents the estimation results for the impact of pro-
posals on board diversity as illustrated in Eq. (4). It compares
the board gender diversity, measured by the change in number
of female directors, for firms targeted by diversity proposals (the
treatment group) versus a matched sample of firms selected using
the propensity score matching method based on the propensity
scores estimated using Eq. (3). Given that some of the firms in
the control group lost a female director, our outcome variable may
take three possible values: +1, −1 and 0 for firms who added, lost,
or neither added or lost at least one female director respectively.
Therefore, we use an ordered Logit model given the ternary nature
of the outcome variable. Overall, we find evidence consistent with
the effectiveness of proposals in improving gender diversity on
corporate boards.
Pr(AddingaFemaleDirector)it =ˇ0 +ˇ1 Proposalit +ˇ2 Proposalit ×Votedit
+ˇ3 Proposalit ×Votedit ×VotePercentageit +ˇ4 Proposalit -1
+ˇ5 Proposalit -1 ×Votedit-1 +ˇ5 Proposalit -1
×Votedit-1 ×VotePercentageit-1 +ˇ6 X it +t +εit
The dependent variable, Adding a Female Director, equals to +1
(−1) when there is an increase (decrease) in number of female
directors on the board, and 0 when there is no change. The treat-
ment variable, Proposal, is also an indicator variable that switches
on when the company is the target of a gender diversity proposal.
Voted is an indicator variable that switches on for proposals that go
to vote and off for proposals that are withdrawn. The independent
variable of interest is Institutional Investor, which is an indicator
variable that switches on when the proposal sponsor is either a
pension fund or an SRI fund. Control variables, Xit ’s are the board
characteristics described in Table 6, and t is the year fixed effect.
The estimation results in columns (1) and (2) show that a pro-
posal which is put to vote or withdrawn significantly increases the
likelihood of allocating an additional seat to a woman. This effect is
not immediate though. The first and the third rows of Table 6 show
that while the coefficient of the treatment variable, Proposal, is sig-
nificant in both the same year that a proposal is filed and the next
year, the former is larger than the latter. The impact of proposals is
robust whether or not we control for board size, age and director’s
independence. This result is consistent with Hypothesis 2
To compare the withdrawn versus voted proposals, the model
is expanded in columns (3) and (4) by adding an interaction term
for voted proposals; i.e., an indicator variable that is equal to one
for voted proposals and zero for withdrawn proposals. The nega-
tive coefficients for the interaction terms on the third and fourth
The Quarterly Review of Economics and Finance xxx (xxxx) xxx–xxx
Percent Implemented at t + 1 Percent Implemented at t and t + 1
23.1 % 25.0 %
23.7 % 39.5 %
20.0 % 46.7 %
23.1 % 35.0 %
rows in columns (3) and (4) show that voted proposals are rela-
tively less effective compared to withdrawn proposals especially
in the same year. Again, this finding is robust to the inclusion of
control variables. Finally, to measure the net effect of voted pro-
posals on improving board gender diversity, the last two rows of
Table 6 report the results for testing if the sum of the coefficients
for Proposalt and Proposalt ×Votedt (ˇ1 + ˇ2 in Eq. (2)) are signifi-
cantly different from zero. The estimation results show that this is
not the case. This finding suggests that although the net impact of
the voted proposals on enhancing gender diversity is positive this
impact is not statistically significant, possibly due to the smaller
sample size of voted versus withdrawn proposals.
Overall, our findings provide strong evidence for shareholder
activism as a strategy for improving gender diversity on corporate
boards. While both proposals that are put to vote, and those that are
withdrawn and do not go to vote, contribute positively to increas-
ing board diversity, this impact is statistically significant only for
withdrawn proposals. This effect is larger in the same year when a
proposal is filed but continues in the next year at a smaller scale.
While the impact is similar for both proposals in the second year,
it is larger for withdrawn proposals in the first year. Therefore, our
findings support Hypothesis 2.
Focusing on the control variables, we find that younger boards
are more diverse; the coefficient on average board age is negative
and statistically significant. If the average age of directors on a board
increases, the likelihood of adding a female director to the board
decreases. Moreover, consistent with Agrawal & Knoeber, 2001,
Carter, Simkins, and Gary Simpson (2003) and Ahern and Dittmar
(2)
(2012), we find evidence that suggests larger boards are more
open to more diversity; the coefficient for Board Size is positive
but statistically insignificant. Finally, the insignificant but negative
coefficient on board independence suggest that boards with more
independent directors are less likely to add female directors pos-
sibly because there is less need for an outsider to break the circle
of insiders. The impact of proposals is robust whether or not we
control for board size and age.
It is important to note that when we examine withdrawn pro-
posals, we miss a big chunk of private negotiations that started
before any proposal is put forward; as mentioned before and
supported by Table A2 in the Appendix. This means that many non-
targeted firms may have actually been targeted by these private
negotiations, biasing our findings against the hypothesized results.
This works in our favor given the significant resulting impact we
find.
5.2. The impact of the magnitude of votes
To test Hypothesis 3, which establishes a link between the mag-
nitudes of votes a proposal receives and its effectiveness, we ask if
diversity proposals with greater voter support are more likely to be
implemented. To measure the impact of magnitude of the votes, the
model in Table 6 is further expanded in columns (5) and (6) by fur-
ther interacting with voting outcome, i.e., the percentage of votes
in favor of a proposal. The estimation results seem not to support
Hypothesis 3. The insignificance of the coefficient of this interac-
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Table 6
Estimation Results for the Effect of both Withdrawn and Voted on Proposals on Board’s Diversity.

Dependent Variable: Likelihood of Adding a Female Director

(1) (2) (3) (4) (5) (6)

Proposalt 1.574*** 1.640*** 2.149*** 2.102*** 2.107*** 2.117***

(0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Proposalt ×Votedt −1.329* −1.397** −1.571 −1.379
(0.05) (0.04) (0.20) (0.31)
Proposalt -1 1.828** 1.816** 1.858**
(0.02) (0.02) (0.01)
Proposalt -1 ×Votedt -1 −1.441 −1.433 −2.135
(0.15) (0.16) (0.26)
Proposalt ×Votedt ×Vote Percentaget 0.009 −0.002
(0.81) (0.97)
Proposalt -1 ×Votedt -1 ×Vote Percentaget -1 0.033
(0.61)
Board Sizet 0.107 0.087 0.089 0.090 0.096
(0.22) (0.29) (0.28) (0.28) (0.25)
Average Age of Directorst −0.107** −0.098** −0.102** −0.103** −0.103**
(0.01) (0.02) (0.02) (0.02) (0.03)
% of Independent Directorst −1.011 −1.433 −1.394 −1.388 −1.358
(0.44) (0.30) (0.30) (0.29) (0.30)
Pseudo R2 0.108 0.135 0.153 0.155 0.155 0.157
N 282 282 282 282 282 282
2 for H0 : ˇ1 + ˇ2 = 0 1.76 1.23
p-value for H0 : ˇ1 + ˇ2 = 0 0.1847 0.2671

This Table presents the estimation results for Eq. (2) for the companies that were targeted by gender diversity proposals at least once between 1997 and 2013. The dependent
variable is an indicator variable capturing board gender diversity that equals to +1 (−1) when there is an increase (decrease) in number of female directors on the board, and 0
when there is no change. The treatment variable (Proposal) is also an indicator variable that switches on when the company was a target of a gender diversity proposal. Voted
is an indicator variable that switches on for proposals that go to vote and off for proposals that are withdrawn. Vote Percentage is the percentage of shareholder votes in favor
of a diversity proposal. As for board characteristics, X, Board Size is the total number of directors on a board. % of Independent Directors is the fraction of the board members
that are independent. Average Age of Directors is the arithmetic mean of directors’ age. P-values are reported in parentheses. All specifications include year fixed-effects.
Standard errors are clustered at the firm level. *, **, and *** denotes significance at the 10 %, 5 %, and 1 % level, respectively.

tion term suggests that the magnitude of votes has no additional
impact. Therefore, we conclude that despite failing, it is the very
existence of a diversity proposal that improves board diversity, not
how much vote support it receives from the shareholders.
5.3. Determinants of voting results
To assess Hypothesis 4, we examine empirically the determi-
nants of voting results for the proposals that end up going to vote.
We conduct an empirical analysis for the subset of proposals that
go to vote (70 proposals) to study if board and firm characteristics
can explain variation in voting results.
VotePercentageit = ˇ0 +ˇ1 %ofWomenonBoardit
+ˇ2 InstitutionalInvestorSponsorit +ˇ3 30%CoalitionSponsor it
+ˇ4 Xit +ˇ5 Zit +t +εit
where the dependent variable, Vote Percentage, is the percentage
of shareholder votes a proposal receives in an annual meeting, %
of Women on Board is the fraction of board seats that are assigned
to women. Institutional Investor Sponsor is an indicator variable
that switches on if the sponsor is either pension fund or an SRI
fund. Variables X and Z are control variables for board and firm
characteristics as described in Table 7.
Estimation results in all columns of Table 7 show that the lower
the board gender diversity, the higher the voting results. The coef-
ficient on board gender diversity, measured by the percentage of
women on the board, ranges from -65.33 to -82.91 across different
columns. Adding a female director to an average board with the
size of 9 (see Table 2), which increases the percentage of women on
board by 11 %, lowers the votes in favor of a proposal by 7.3%–9.2%.
The large magnitude of this coefficient suggests that shareholders
indeed are sensitive to board diversity when casting their votes.
Because of collinearity of other potential determinants of the
voting results, we had to estimate separate empirical models for
different sets of variables. Results in columns (2) and (3) show that
proposals, whose sponsor is an institutional investor or a member
of 30 % Coalition, tend to receive higher votes. Results in column (4)
suggest that other board characteristics such as board size, direc-
tors’ independence and average directors age don’t seem to have
any significant impact on the voting results. Finally, results in col-
umn (5) show that firms with lower Tobin’s Q and lower levels of
capital expenditures receive more votes while firm size and prof-
itability seem not to as important. In an unreported table, when we
add the percentage of Institutional Ownership obtained from Fact-
Set to our model to control for ownership composition, we find
that our main result for the % of Women on Board is robust to this
change. Moreover, we find that institutional ownership and share-
holder pressure, as manifested by the number of other proposals,
significantly increase the voting results, but the small sample size
(3) makes it hard to interpret these results. Overall, our results show
that when shareholders vote on diversity proposals they are more
sensitive to the current level of board gender diversity as well as
who is the sponsor of a proposals. Therefore, our findings support
Hypothesis 4.
5.4. The sponsor effect
To investigate the importance of the proposal sponsor as stated
in Hypothesis 5, we ask if proposals sponsored by institutional
investors are more effective? To examine this formally, we add a
new term to Eq. (2) for the interaction between the sponsor and
proposal types as illustrated in Eq. (4):
Pr(AddingaFemaleDirector)it =ˇ0 +ˇ1 Proposalit +ˇ2 Proposalit
×Votedit +ˇ3 Proposalit ×Sponsorit +ˇ4 Proposalit -1 +ˇ5 Proposalit -1

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Table 7
Estimation Results for the Determinants of Voting Results.

Dependent Variable: Vote Percentage for Diversity Proposals

(1) (2) (3) (4) (5)

% of Women on Board −82.912*** −66.703** −66.773** −65.335** −71.553**

(0.00) (0.02) (0.01) (0.04) (0.02)
Institutional Investor Sponsor 5.971**
(0.04)
30 % Coalition Sponsor 6.267**
(0.05)
% of Independent Directors 4.722
(0.49)
Average Age of Directors 0.316
(0.38)
Board Size −0.581
(0.24)
ROA 29.482
(0.22)
Log(Assets) −1.126
(0.32)
Tobin’s Q −2.873**
(0.04)
Capex −59.748**
(0.02)
Constant 21.384*** 18.780*** 18.763*** 3.971 37.105***
(0.00) (0.00) (0.00) (0.85) (0.00)
R2 0.130 0.187 0.183 0.163 0.220
N 65 65 61 65 54

This Table presents the estimation results for equation (3) for proposals that go to vote between 1997 and 2013, where the dependent variable, Vote Percentage, is the
percentage of shareholder votes a proposal receives in an annual meeting, and % of Women on Board is the fraction of board seats that are assigned to women. Institutional
Investor Sponsor is an indicator variable that switches on if the sponsor is either pension fund or an SRI fund. Variables X and Z in Eq. (3) represent board and firm characteristics.
As for board characteristics, Board Size is total number of directions on a board. % of Independent Directors is the fraction of the board members that are independent. Average
Age of Directors is the arithmetic mean of directors’ age. Firm characteristics include ROA; return on assets, Log(Assets); firm size, Tobin’s Q; the ratio of firm’s market value of
equity to its book value, Capex; the ratio of investment in capital expenditure to total assets. P-values are reported in parentheses. All specifications include year fixed-effects.
Standard errors are clustered at the firm level. *, **, and *** denotes significance at the 10 %, 5 %, and 1 % level, respectively.

×Votedit-1 +ˇ6 Proposalit -1 ×Sponsorit-1 +ˇ7 X it +t +εit (4) Table 8

Estimation Results for the Effect of Sponsor of a Proposal on Board Diversity.

Dependent Variable: Likelihood of Adding a Female Director

The definition of the dependent variable, Adding a Female Direc-
(1) (2) (3) (4)
tor, and independent variables, Proposal, and Voted are the same
as in Eq. (2). The independent variable of interest is Institutional Proposalt 1.774*** 2.174** 1.801*** 2.137**
(0.01) (0.01) (0.01) (0.01)
Investor, which is an indicator variable that switches on when the
Proposalt ×Votedt −1.233* −1.499** −1.165 −1.457*
proposal sponsor is either a pension fund or an SRI fund. Control (0.08) (0.03) (0.11) (0.05)
variables, Xit , are the same as in Table 6. Institutional Investor t × Proposal t 0.923 0.393 0.934 0.466
Table 8 shows the estimation results. Similar to Table 6, an (0.12) (0.61) (0.13) (0.54)
Proposalt -1 2.001*** 2.370***
ordered Logit model is used here to capture both adding and remov-
(0.01) (0.00)
ing of a female director to the board. The main difference between Proposalt -1 ×Votedt -1 −2.827** −3.041**
Tables 8 and 6 is that here the second interaction term is between (0.04) (0.01)
the Proposal and Institutional Investor, which is the variable of Institutional Investor t -1 × Proposal t -1 3.034** 2.917**
interest here. Similar to Table 6, the coefficients of Proposal and Pro- (0.03) (0.03)
Board Sizet 0.107 0.114
posal*Voted are both positive and significant for t and t-1 confirming
(0.20) (0.20)
the overall effectiveness of proposals and relative more effective- Average Age of Directorst −0.091** −0.092**
ness for withdrawn proposals. More importantly, in columns (1) (0.02) (0.02)
and (2) the coefficients of the new interaction terms for institu- % of Independent Directorst −1.178 −1.113
(0.38) (0.43)
tional sponsors and proposal, ˇ4 and ˇ6 , are positive and significant
Pseudo R2 0.145 0.168 0.168 0.191
at the 12 %-level in t in column (1) and at the 3 %-level in t-1 in N 282 282 282 282
column (2) respectively. The large size of these coefficients sug-
This Table presents the estimation results for Eq. (4) for the companies that were
gests that perhaps proposals sponsored by institutional investors
targeted by a gender diversity proposal at least once between 1997 and 2013. The
are more likely to result in the addition of a female director than dependent variable is an indicator variable capturing board gender diversity that is
proposals sponsored by individuals or religious organizations. This equal to +1 when a new female director is added to the board, -1 when a female
finding does not change when we include control variables as illus- director is removed from the board, and 0 when there is no change. Proposal is also
an indicator variable that switches on when the company was a target of a gender
trated in columns (3) and (4) of Table 8. Therefore, our finding are
diversity proposal. Voted is an indicator variable that switches on for proposals that
consistent with Hypothesis 5. go to vote and off for proposals that are withdrawn. Institutional Investor is an indi-
cator variable that switches on when the proposal sponsor is either a pension fund
or a SRI fund. P-values are reported in parentheses. All specifications include year
6. Endogeneity of proposals and the instrument variable
fixed-effects. Standard errors are clustered at the firm level. *, **, and *** denotes
approach significance at the 10 %, 5 %, and 1 % level, respectively.

The result of our empirical findings up to this point must be

interpreted with an important caveat in mind. There are two pos-

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Table 9 estimate equation (2) using a 2SLS model (instead of ordered Logit
Estimation Results for the Instrument Variable Model.
as in Tables 6 and 8) because of difficulties with combining the
Dependent Variable: Likelihood of Adding a Female Director instrument variable approach with the ordered Logit model. The
estimation results are presented in Table 9.
(1) (2) (3) (4)
To eliminate any contemporaneous effect of diversity on pro-
Withdrawn Proposalt 0.461*** 0.463***
posals, we only include the lagged values of the withdrawn and
(0.01) (0.00)
Voted Proposalt 0.199*** 0.227*** voted proposal variables in the model. Consistent with our ear-
(0.00) (0.00) lier findings, the coefficients reported on the first two rows of
Board Sizet 0.007*** 0.009*** Table 9 show a significant and positive impact of proposals on board
(0.00) (0.00) diversity. Not surprisingly, these coefficients are larger than the
Average Directors Aget −0.005*** −0.006***
(0.00) (0.00)
unreported OLS version of the ones in previous tables, reflecting
% of Independent Directorst −0.079* 0.006 the fact that they capture the effect of treatment-on-the-treated
(0.06) (0.87) instead of average treatment. As pointed out by Card (1999) in the
Constant 0.112** 0.437*** 0.164*** 0.481*** context of the effect of years of education on wages, the literature
(0.01) (0.00) (0.00) (0.00)
2
finds that the instrumental variable estimates are generally larger
R 0.0195 0.0252 0.0453 0.0550
N 1810 1810 1810 1810 than OLS estimates. The sign and significance of control variables
also remain similar to the earlier tables. Consistent with the first
This Table presents the estimation results of the second stage of an instrumental
variable approach that is used to address the endogeneity issue in equation (2).
view, this result suggests that diversity proposals impact diver-
The sample includes companies that were targeted by gender diversity proposals at sity, reinforcing the shareholder activism channel as an effective
least once between 1997 and 2013. The instruments are lagged values of treatment mechanism for change.
variable Voted Proposal. The dependent variable is an indicator variable capturing In sum, the instrumental variable approach provides suggestive
board gender diversity which switches on when a new female director is added
evidence that confirms the significance of the initiation of diver-
to the board, and other variables are defined as before. P-values are reported in
parenthesis. sity proposals as a mechanism for improving diversity in corporate
boards. The fact that we find a similar significant impact for with-
drawn or omitted7 proposals as for voted proposals shows that it’s
sible explanations for the link between shareholder proposals and not the appearance of proposals on proxy filings that causes the
changes in board diversity that are not fully distinguished by our change. The fact that a proposal is initiated, even though it is omit-
analysis so far. First, diversity-related proposals are the reason ted or withdrawn, still impacts board diversity. Further research to
behind the improvement in gender diversity on corporate boards. assess the causality impact of proposals on diversity would require
They play a key role by bringing the problem to the attention of more information on how the desire to change impacts board diver-
the company’s management, as well as other stakeholders, creat- sity in the absence of any proposals. Unfortunately, data limitation
ing enough pressure for a change. In this view, proposals are the makes it difficult to measure the desire to change. Perhaps, with
cause for more diversity. Second, the improvement in corporate more data from the minutes of annual shareholder meetings, a tex-
board diversity is the result of a desire to change, and not the share- tual analysis of those minutes could provide a way to quantify the
holders’ proposals per se. That is to say, the improvements in board demand for change.
diversity would have happened even if there were no proposal. In
this view, the proposals simply reflect the demand for a change 7. Conclusion
but do not cause the change. In other words, both proposals and
changes in the board diversity are caused by an omitted variable, Rather than exogenous government mandated quotes,
the desire to change. Although our findings so far provide some economies such as the US predominantly rely on the endoge-
suggestive evidence, they do not distinguish between these two nous approach of shareholder resolutions to effect social change.
alternative explanations. Superficially in the case of gender, it would appear that this
To distinguish between these two explanations, we need an endogenous approach has failed, given that the vast majority
exogenous shift in the likelihood of putting forth a proposal. We of diversity resolutions fail to be formally adopted. However,
exploit the dynamics of voted and withdrawn proposals in the data the empirical results that we present here indicate otherwise.
by using the lag of a Voted Proposal variable as an instrument that Specifically, failure actually means success: whether proposals
shifts the likelihood of having a voted or withdrawn proposal. As are directly voted down or withdrawn before the vote, they still
illustrated in Table A1 in the Appendix, proposals that are put to have the power to effect change. Our results indicate that these
vote usually come in a series that ends with a withdrawn proposal. failed resolutions do in fact lead directly to greater future female
For example, the board of Coastal Corporation received a diversity participation on corporate boards.
proposal in 1997 which was followed by another in 1998. They We show that the relevant way to characterize shareholder pro-
both went to vote and only received 12 % and 16 % of votes respec- posals is based on the negotiation level of shareholder activists to
tively. The following year they received another proposal which generate internal or external pressure on management to promote
this time was withdrawn from the voting process, indicating an board gender diversity. We provide empirical evidence that is con-
agreement between the company and the sponsor of the proposal, sistent with more effectiveness for private negotiations (internal
the ICCR. Consistent with this observation, Table 9 shows that the pressure), which result in a withdrawn proposal, as opposed to the
lag of the Voted Proposal variable is a strong predictor for both social (external) pressure resulting in a voted-on-proposal. Private
its contemporaneous value and for the Withdrawn Proposal vari- negotiations that result in a withdrawn proposal generate imme-
able. This means that having a proposal that goes to vote this year diate and stronger change and are thus generally considered as a
does indeed increase the likelihood of observing another proposal “success.” Contrarily, a proposal that goes to vote signals a failure of
(voted or withdrawn) next year. Thus, our instrument satisfies the
first condition to be a valid instrument: inclusion restriction. As for
the second condition, exclusion restriction, we argue that the only 7
Analysis of omitted proposals provides similar results to the ones we found
way a proposal in the past can affect board diversity in the future for voted and withdrawn proposals. Despite the very small sample size (only 8
is by raising the probability of having more proposals that are put proposals), our unreported estimation results show that omitted proposals also
to vote or withdrawn in the future. Using this instrument, we re- significantly improve board gender diversity.

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private negotiations, which leaves no choice for the proposal spon-
sor but to generate social pressure thorough putting a proposal to
vote. We show that no matter how many votes those proposals
receive, they are still an effective way to improve board gender
diversity. Although this suggests that the voting result is not rele-
vant to the outcome, investor voting results show that they indeed
support diversity proposals more in less diverse firms.
Our study has important implications for practitioners, man-
agers, policy makers and the research community. Our results
indicate that company management responds to shareholder pres-
sure. Our results can also provide insight for proposal sponsors.
Proposal sponsors can use these results to gauge the effectiveness
of the activism channel they use for promoting board gender diver-
sity: institutional investors are the more effective sponsors.
Our findings indicate several channels for future research. In the
context of achieving diversity, we shed light on the relative suc-
cess of shareholder activism stages (internal pressure resulting in
withdrawal versus external social pressure resulting in sharehold-
ers’ vote) in promoting board gender diversity. Further research
can clarify the nuances and distinctions between these two stages
of shareholder activism. We also find a stronger and more rapid
positive reaction from shareholders to a withdrawn proposal as
compared to one that goes to vote. These results raise a variety of
empirical questions concerning the power of, and market reaction
to, shareholder activism.
Finally, our results have broad policy implications for regulators
concerning the ability of endogenous shareholder-activist channels
to achieve social ends. Policy makers with concerns regarding the
current level of diversity in corporate boards can promote share-
holder activism as a promising alternative reform mechanism to
the European quota approach that is not subject to the negative
side effects (stereotypes) associated with the latter. Our results
demonstrate that, in the context of board gender diversity, share-
holder resolutions are a viable alternative to government-mandated
quotas.
Appendix A.

Table A1
Intertemporal Correlation Matrix for Voted Proposals (VP) and Withdrawn Proposals (WP).

VPt VPt -1 VPt -2 WPt WPt -1 WPt -2

VPt 1
VPt -1 0.4258*** 1
VPt -2 0.1517*** 0.4347*** 1
WPt −0.0552*** 0.1916*** 0.0545* 1
WPt -1 −0.0570*** −0.0568*** 0.1912*** −0.0517* 1
WPt -2 −0.053* −0.0557* −0.0539* −0.0186 −0.0505* 1

This Table presents the correlation matrix for treatment variables and their lagged values. VP and WP are indicator variables for a voted and withdrawn proposals. Significance
at the 10 %, 5 %, and 1 % levels is indicated by *, **, and ***, respectively.

Table A2
Examples of private negotiations before filing a proposal.

Company Report Title Corporate Governance Engagement Principles URL

California State Teachers’ Retirement
System (CALSTRS)
Calvert Asset Management
Connecticut Retirement Plans and
Trust Funds (CRPTF)
Corporate Governance
Principles-Stewardship Code
for Engagement
Shareholder Advocacy Report
Corporate Governance
Overview
"All of CalSTRS’ engagement activities begin https://www.calstrs.com/sites/main/
with private contact with the company. We are files/file-attachments/corporate
always open to having dialogue with the governance principles 1.pdf
companies in which we invest and hope
companies seek our input on matters
important to shareholders, as we are the
ultimate long-term shareholder. At times we
do submit shareholder proposals at companies,
but once again we are very open to having a
dialogue with companies on issues important
to us." "The first step upon the evidence of the
existence of social injury is engagement by
CalSTRS Corporate Governance staff directly
with the company. CalSTRS will notify the
company of the issue and seek a direct dialog
with top ranking management and if needed
directly with the board of directors."
"One of the most important advocacy tools at https://www.calvert.com/tools-of-
Calvert’s disposal is informed and constructive change.php
direct dialogue with senior management, built
on a foundation of trust and an understanding
of shared goals. Calvert engages directly with
companies both on its own and as part of
investor or broader stakeholder coalitions. . .If
no successful action is taken with dialogue, we
may file a shareholder resolution to facilitate
positive change within a company."
"Engagements often begin with discussions http://www.ott.ct.gov/about
between the Office and board members, chief corporate governance.html
executive officers, and/or senior management
of portfolio companies, and may last several
years. The CRPTF has also utilized the
shareholder resolution process, as an
engagement tool with portfolio companies."

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Table A2 (Continued)

Company Report Title Corporate Governance Engagement Principles URL

Domini Impact Investments
Evangelical Lutheran Church in
America (Portico Benefit Services is
responsible for the Corporate Social
Responsibility ministry of the ELCA)
Interfaith Center on Corporate
Responsibility (ICCR)
Walden Asset Management
CALSTRS
Wespath Investment Management
(formerly, General Board of Pension
and Health Benefits)
Activism Approach
Shareholder Advocacy
The Art (and Science) of
Shareholder Engagement
Shareholder Engagement
Corporate Governance Update:
Prioritizing Board Diversity
Shareholder Engagement:
Dialogue and Resolutions
When we have a concern with a company, we https://www.domini.com/responsible-
often begin by encouraging corporate investing/making-difference/activism-
management to come to the table to discuss approach
our concerns. Many companies respond to this
offer, and are willing to listen to our
perspective.
"If companies don’t respond favorably to https://porticobenefits.org/
dialogue, Portico may file a shareholder PorticoBenefits/Overview/
resolution." ReponsibleInvesting/
ShareholderAdvocacy.aspx
"When dialogues are unproductive, ICCR may http://www.iccr.org/sites/default/files/
issue shareholder resolutions to engage cevol38no5.pdf
management and other investors’ attention
around a specific issue."
"In cases where companies are not sufficiently http://waldenassetmgmt.com/
responsive or where dialogue breaks down, we investing-for-change/shareholder-
are able to take our concerns directly to other engagement/
shareholders through the shareholder
resolution process."
“In a similar effort, CalSTRS recently submitted https://corpgov.law.harvard.edu/2017/
125 letters to boards at California corporations 01/30/corporate-governance-update-
whose boards had no women directors; in prioritizing-board-diversity/
response, 35 of the companies appointed
female board members. CalSTRS has indicated
that if its private approaches are unsuccessful,
it will proceed with shareholder proposals.”
"Many of the conversations continue over https://www.wespath.com/
several years and result in changes to investment philosophy/shareholder
corporate policy and business practices– clear advocacy/advocacy dialogue/
evidence that advocacy can have a real impact
on investment performance. If attempts at
direct dialogue are not productive, Wespath or
its partners will file a public shareholder
resolution to encourage action by the
company."

Table A3
Examples of withdrawn proposals and reasons behind the withdrawal decision.

Sponsor Date Companies Reason for Withdrawal Source

CALSTRS 9/26/10 Liberty Global, INC.; C̈alSTRS submitted nine proposals on board diversity. https://www.calstrs.com/news-
Nutrisystem, INC.; six other All but one was withdrawn after the companies release/calstrs-reports-corporate-
unspecified companies amended their governing documents to ensure that governance-success-2010-proxy-
diversity was one characteristic they considered when season
developing a pool of board candidates. In two cases, at
NutriSystem Inc. and Liberty Global Inc., the
companies added a woman to their board so the
proposals were withdrawn.¨
Calvert Asset 6/3/03 Molex Corporation C̈alvert withdrew its shareholder resolution asking the https://www.businesswire.com/news/
Management company to bring race and gender diversity to its home/20030606005035/en/Calvert-
board of directors after Molex appointed the first Shareholder-Resolutions-Receive-
woman to its board.¨ Record-Support-Results
Connecticut 12/17/09 EOG Resources, INC T̈he purpose of this letter is to withdraw the https://www.sec.gov/Archives/edgar/
Retirement Plans & shareholder resolution co-filed by the Connecticut vprr/1001/10010418.pdf
Trust Funds (CRPTF) Retirement Plans & Trust Funds (“CRPTF”) and
submitted to EOG Resources on November 19, 2009.
We are withdrawing our resolution based on the
commitment of the Company’s Nominating &
Governance Committee to amend their governance
documents to reflect additional considerations of
diversity including specific mentions of race and
gender.¨
Connecticut 4/24/15 Monster Beverage M̈onster Beverage agreed to amend its charter to say: http://www.ott.ct.gov/pressreleases/
Retirement Plans & ’Diversity of race, ethnicity, gender, sexual orientation press2015/PR042415TreasurerNappier
Trust Funds (CRPTF) and gender identity are factors in evaluating suitable AnnouncesMonsterBeverageAgreement.
candidates for Board membership. The [Nominating] pdf
Committee will consider diverse candidates in the pool
from which Board nominees are chosen, including
without limitation nominees from both corporate
positions beyond the executive suite and non -
traditional environments.’ Monster Beverage also will
nominate a woman for the first time to its board. The
name will be announced when it releases its proxy
statement for its 2015 annual meeting. As a result of
the agreement, the CRPTF has withdrawn the board
diversity proposal it filed at Monster Beverage.¨

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Table A3 (Continued)

Sponsor Date Companies Reason for Withdrawal Source

Trillium Asset 4/2/13 Superior Energy Services, Ïn the autumn of 2012, Trillium filed board diversity http://www.trilliuminvest.com/
Management INC.; Zimmer Holdings, shareholder proposals at Superior Energy (NYSE: SPN), trillium-successfully-withdraws-four-
INC. Hartford Financial (NYSE: HIG), Zimmer Holdings board-diversity-proposals-6/
(NYSE: ZMH) and Lowe’s Companies (NYSE: LOW). The
proposals asked each company to: “publicly commit
[themselves] to a policy of Board inclusiveness to
ensure that women are routinely sought as part of
every Board search the company undertakes” At the
time of the filings, each company had either no women
or only one woman on its board of directors. Further,
none of the four companies disclosed diversity,
inclusive of gender or race, as part of its board
nominee search process. Following Trillium’s
successful engagement this spring, all four companies
agreed to amend their governance documents to
include a clear definition of diversity, inclusive of
gender and race, and make diversity an intentional
part of board nominee search criteria. Subsequently,
Trillium withdrew our proposals.¨
Walden Asset 2015 Cohen & Steers Ẅalden’s shareholder proposal urging Cohen & Steers http://waldenassetmgmt.com/new/
Management to take additional steps to increase board diversity was waldens-2015-shareholder-
withdrawn when the company agreed to amend its resolutions/
corporate governance documents to reference gender
and race as factors considered in nominating directors
and enhance disclosure in its proxy statement and
website.¨
Walden Asset 2013 NetApp T̈echnology company NetApp is among the small http://waldenassetmgmt.com/new/
Management minority (10 percent) of S&P 500 companies currently summary-waldens-2013-shareholder-
without a woman director. Walden’s shareholder resolutions/
proposal asking NetApp to take additional steps to
increase board diversity was withdrawn with an
agreement to enhance disclosure in its proxy
statement on the value of diversity as well as on
implementation processes to help identify women and
people of color for the director candidate pool.¨

Declaration of Competing Interest
The authors report no declarations of interest.
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