Company Stock in Defined Contribution Plans: Evidence from Proxy Voting
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This study examines whether firms' decisions to offer company stock in defined contribution (DC) plans are explained by managers' corporate control motives. Using a large sample of proxy voting outcomes, I find that employee ownership in DC plans is significantly and positively associated with the level of voting support for management sponsored proposals. This suggests that managers encourage employee DC holdings in company stock in order to receive higher voting support in favor of management. The effects of employee ownership on voting outcomes are significantly greater in subsample tests than in full sample tests: management proposals opposed by Institutional Shareholder Services, management proposals of close votes, director election votes receiving more than 20% of votes withheld, and say-on-pay frequency proposals.