Proxy Contests: The Evidence

Abstract

This paper reviews the theoretical and empirical contributions to the proxy contest literature. Research to date suggest that: 1. The use of the proxy contest as a method of taking over a corporation depends on its cost relative to the tender offer; 2. The security voting structure and debt/equity ratio influence the outcome of the proxy contest; and 3. The value of a proxy contest can be estimated using the principles of option pricing theory.