Abstract
We examine the impact of earnings announcements on the value of shareholder voting rights (i.e., voting premium) estimated using a new technique that exploits option prices. We find voting premium is negatively related to earnings surprises. This relation is primarily driven by unfavorable earnings surprises, strengthened in the presence of impending shareholder meetings, and attenuated when managerial incentives are aligned with shareholders. Variation in voting premium around earnings announcements predicts future exercises of control rights in firms, such as CEO turnovers, takeovers, and corporate restructurings. Our results highlight a strong link between control rights and information disseminated in earnings announcements.
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