Voting Outcomes Research Articles

Passive Aggressive: How Index Funds Vote on Corporate Governance Proposals

I study how index funds affect corporate governance through their votes in proxy meetings. The data includes all mutual fund votes on 159,262 proposals at 6,260 firms over the period 2005–2016. I measure the value created by a proposal using a Regression Discontinuity Design on the market reaction to a narrow vote outcome, and I derive four main results. First, the market reaction to a proposal’s passage (resp. failure) is stronger if a larger proportion of index funds vote to support (resp. oppose) it. Second index funds optimally allocate limited monitoring resources to votes for which they are pivotal. Third, index fund ownership of a company’s stock (as instrumented using the Russell 1000/2000 cutoff) promotes the adoption of value-creating proposals. Fourth, managers of firms with higher index fund ownership present fewer value-reducing proposals. Overall, my results imply that index fund ownership improves corporate governance of portfolio firms by making value-creating proposals, and their passage, more likely.

Health as an independent predictor of the 2017 French presidential voting behaviour: a cross-sectional analysis

BackgroundIt has been suggested that poor health has influenced vote for Brexit and the US presidential election. No such research has been published regarding the 2017 French presidential election.MethodsWe performed a cross-sectional analysis using a comprehensive set of socioeconomic and health indicators, to be compared with voting outcome at the first round of the 2017 French presidential election. The 95 French departments were selected as the unit of analysis. Data were obtained from publicly available sources. The linear model was used for both univariate and multivariate analysis to investigate the relation between voting patterns and predictors. Sensitivity analyses were done using the elastic-net regularisation.ResultsEmmanuel Macron and Marine Le Pen arrived ahead. When projected on the first factorial plane (~ 60% of the total inertia), Emmanuel Macron and Marine Le Pen tended to be in opposite directions regarding both socioeconomic and health factors. In the respective multivariate analyses of the two candidates, both socio-economic and health variables were significantly associated with voting patterns, with wealthier and healthier departments more likely to vote for Emmanuel Macron, and opposite departments more likely to vote for Marine Le Pen. Mortality (p = 0.03), severe chronic conditions (p = 0.014), and diabetes mellitus (p < 0.0001) were among the strongest predictors of voting pattern for Marine Le Pen. Sensitivity analyses did not substantially change those findings.ConclusionsWe found that areas associated with poorer health status were significantly more likely to vote for the far-right candidate at the French presidential election, even after adjustment on socioeconomic criteria.

Procedural Justice and the Risks of Consumer Voting

Firms are increasingly giving consumers the vote. Eight studies show that, when firms empower consumers to vote, consumers infer a series of implicit promises—even in the absence of explicit promises. We identify three implicit promises to which consumers react negatively when violated: representation (Experiments 1A–1C), consistency (Experiment 2), and nonsuppression (Experiment 3). However, when firms honor these implicit promises, voting can mitigate the disappointment that arises from receiving an undesired outcome (Experiment 4). Finally, Experiment 5 identifies one instance when suppressing the vote outcome is condoned: when voters believe that the process of voting has resulted in an unacceptable outcome. More generally, we show that procedural justice plays a key mediating role in determining the relative success or failure of various empowerment initiatives—from soliciting feedback to voting. Taken together, we offer insight into how firms can realize the benefits of empowerment strategies while mitigating their risks. This paper was accepted by Elke Weber, judgment and decision making.

Public goods, voting, and growth

AbstractWe study a parametric politico‐economic model of economic growth with productive public goods and public consumption goods. The provision of public goods is funded by a proportional tax. Agents are heterogeneous in their initial capital endowments, discount factors, and the relative weights of public consumption in overall private utility. They vote on the shares of public goods in gross domestic products (GDP). We propose a definition of voting equilibrium, prove the existence and provide a characterization of voting equilibria, and obtain a closed‐form solution for the voting outcomes. Also we introduce a “fictitious” representative agent and interpret the outcome of voting as a choice made by a central planner for his benefit. Finally, we undertake comparative static analysis of the shares of public goods in GDP and of the rate of balanced growth with respect to the discount factors and the preferences for public consumption. The results of this analysis suggest that the representative‐agent version of our model is capable of capturing the interaction between many voting heterogeneous agents only if the heterogeneity is one‐dimensional.

Do Corporate Governance Ratings Change Investor Expectations? Evidence from Announcements by Institutional Shareholder Services*

Abstract This paper examines empirically the announcement effect of commercial corporate governance ratings on share returns. Rating downgrades by Institutional Shareholder Services (ISS) are associated with negative returns of –1.14% over a 3-day announcement window. The returns are highly correlated with the proprietary analysis of ISS and are decreasing in agency costs, consistent with ratings providing independent information on underlying corporate governance quality. We thus show that the influence and impact of ISS extends beyond proxy recommendations and subsequent voting outcomes. Our findings contrast with the insignificant price impact of Daines, Gow, and Larcker (2010), whose analysis we replicate and successfully reconcile to ours by pooling upgrades and downgrades together.

Cryptocurrency value changes in response to national elections: do they behave like money or commodities?

ABSTRACT This study examines changes in the value of Bitcoin after the BREXIT and US Presidential elections in 2016 to determine whether it and other cryptocurrencies experienced value changes associated with the vote outcomes. For comparative purposes, Bitcoin is also compared to currencies such as the Great Britain Pound, Mexican Peso and Special Drawing Rights to determine whether Bitcoin values change like currencies. Some evidence showed changes in the value of Bitcoin were weakly similar to store-of-wealth commodities like gold and silver. Overall, the election-window volatility of cryptocurrencies was much higher than the preceding one-year average for the BREXIT vote but less volatile than the one-year average for the US election vote.

Opposing the Strategic Arms Reduction Treaty in the U.S. Congress: Ideological analysis of Senate Armed Services and Foreign Relations Committee Hearings

The United States Senate voted to ratify the New Strategic Arms Reduction Treaty with Russia in 2010 by 74-26, all 26 voting against being Republicans. The change in the voting outcome compared to the 95-0 result in the 2003 SORT vote was dramatic. Using inductive frame analysis, this article analyzes committee hearings in the Senate Foreign Relations and the Armed Services committees in order to identify competing narratives defining individual senators’ positions on the ratification of the New START. Building on conceptual framework introduced by Walter Russel Mead (2002), it distinguishes four schools of thought: Jacksonian, Hamiltonian, Jeffersonian, and Wilsonian. The argumentation used in the hearings is deconstructed in order to understand the increase in opposition to the traditionally bipartisan nuclear arms control regime. The results reveal a factionalism in the Republican Party. The argumentationin opposition to ratification traces back to the Jacksonian school, whereas argumentation supporting the ratification traces back to Hamiltonian, Jeffersonian and Wilsonian traditions. According to opposition, the Obama administration was pursuing its idealistic goal of a world-without-nuclear-weapons and its misguided Russia reset policy by any means necessary – most importantly by compromising with Russia on U.S. European-based missile defense.

Why is free education so popular? A political economy explanation

AbstractThis paper analyzes the political support for different funding regimes of education in a one‐person, one‐vote democracy. We focus the analysis on four systems that have had a preponderant presence in the political debate on education: a private system, a public system that delivers the same resources to each student (universal‐free education), a public system that intends to equalize results, and a public system that aims to maximize the output of the economy. We show that a system of universal free education is the Condorcet winner. The level of income inequality and the degree to which income distribution is skewed to the right are key factors behind this conclusion. We also show that the voting outcome of public versus private funding for education depends crucially on the type of public funding under consideration.

Information gerrymandering and undemocratic decisions.

People must integrate disparate sources of information when making decisions, especially in social contexts. But information does not always flow freely. It can be constrained by social networks1-3 and distorted by zealots and automated bots4. Here we develop a voter game as a model system to study information flow in collective decisions. Players are assigned to competing groups (parties) and placed on an 'influence network' that determines whose voting intentions each player can observe. Players are incentivized to vote according to partisan interest, but also to coordinate their vote with the entire group. Our mathematical analysis uncovers a phenomenon that we call information gerrymandering: the structure of the influence network can sway the vote outcome towards one party, even when both parties have equal sizes and each player has the same influence. A small number of zealots, when strategically placed on the influence network, can also induce information gerrymandering and thereby bias vote outcomes. We confirm the predicted effects of information gerrymandering in social network experiments with n=2,520 human subjects. Furthermore, we identify extensive information gerrymandering in real-world influence networks, including online political discussions leading up to the US federal elections, and in historical patterns of bill co-sponsorship in the US Congress and European legislatures. Our analysis provides an account of the vulnerabilities of collective decision-making to systematic distortion by restricted information flow. Our analysis also highlights a group-level social dilemma: information gerrymandering can enable one party to sway decisions in its favour, but when multiple parties engage in gerrymandering the group loses its ability to reach consensus and remains trapped in deadlock.

Managerial Entrenchment and Information Production

In this article, we evaluate the effect of managerial entrenchment on corporate information production using the voting outcomes of shareholder-initiated proposals intended to mitigate managerial entrenchment. We focus on the proposals that are passed or rejected by a small margin of votes, which generate plausibly exogenous variations in managerial entrenchment. We find that a reduction in managerial entrenchment enhances corporate information production. The effects are stronger for firms with greater information asymmetries and severer agency frictions. Overall, the evidence is consistent with the view that reducing managerial entrenchment enhances corporate disclosure by aligning the incentives of managers and shareholders.

Rain, emotions and voting for the status quo

Do emotions affect the decision between change and the status quo? We exploit exogenous variation in emotions caused by rain and analyze data on more than 870,000 municipal vote outcomes in Switzerland to address this question. The empirical tests are based on administrative ballot outcomes and individual postvote survey data. We find that rain decreases the share of votes for political change. Our robustness checks suggest that this finding is not driven by changes in the composition of the electorate and changes in information acquisition. In addition, we provide evidence that rain might have altered the outcome of several high-stake votes. We discuss the psychological mechanism and document that rain reduces the willingness to take risks, a pattern that is consistent with the observed reduction in the support for change.

On the Complexity of the Inverse Semivalue Problem for Weighted Voting Games

Weighted voting games are a family of cooperative games, typically used to model voting situations where a number of agents (players) vote against or for a proposal. In such games, a proposal is accepted if an appropriately weighted sum of the votes exceeds a prespecified threshold. As the influence of a player over the voting outcome is not in general proportional to her assigned weight, various power indices have been proposed to measure each player’s influence. The inverse power index problem is the problem of designing a weighted voting game that achieves a set of target influences according to a predefined power index. In this work, we study the computational complexity of the inverse problem when the power index belongs to the class of semivalues. We prove that the inverse problem is computationally intractable for a broad family of semivalues, including all regular semivalues. As a special case of our general result, we establish computational hardness of the inverse problem for the Banzhaf indices and the Shapley values, arguably the most popular power indices.

Predicting Voting Outcomes Using Data Analytics and Machine Learning Algorithms

International Journal of Computer Sciences and Engineering (A UGC Approved and indexed with DOI, ICI and Approved, DPI Digital Library) is one of the leading and growing open access, peer-reviewed, monthly, and scientific research journal for scientists, engineers, research scholars, and academicians, which gains a foothold in Asia and opens to the world, aims to publish original, theoretical and practical advances in Computer Science,Information Technology, Engineering (Software, Mechanical, Civil, Electronics & Electrical), and all interdisciplinary streams of Computing Sciences. It intends to disseminate original, scientific, theoretical or applied research in the field of Computer Sciences and allied fields. It provides a platform for publishing results and research with a strong empirical component. It aims to bridge the significant gap between research and practice by promoting the publication of original, novel, industry-relevant research.

The Costs of Economic Nationalism: Evidence from the Brexit Experiment*

AbstractEconomic nationalism is on the rise, but at what cost? We study this question using the unexpected outcome of the Brexit referendum vote as a natural macroeconomic experiment. Employing synthetic control methods, we first show that the Brexit vote has caused a UK output loss of 1.7% to 2.5% by year-end 2018. An expectations-augmented VAR suggests that these costs are, to a large extent, driven by a downward revision of growth expectations in response to the vote. Linking quasi-experimental identification to structural time-series estimation allows us not only to quantify the aggregate costs but also to understand the channels through which expected economic disintegration impacts the macroeconomy.

Political Responses to Economic Shocks

How does the experience of economic shocks affect individuals' political views and voting behavior? Inspired partly by the fallout of the financial crisis of 2008, research on this question has proliferated. Findings from studies covering a broadening range of countries and economic contexts highlight several notable patterns. Economic shocks—e.g., job loss or sharp drop in income—exert a significant and theoretically predictable, if often transient, effect on political attitudes. In contrast, the effect on voting behavior is more limited in magnitude and its manifestations less understood. Negative economic shocks tend to increase support for more expansive social policy and for redistribution, strengthening the appeal of the left. But such shocks also tend to decrease trust in political institutions, thus potentially driving the voters to support radical or populist parties, or demobilizing them altogether. Further research is needed to detect the conditions that lead to these distinct voting outcomes.

Are Presidential Inversions Inevitable? Comparing Eight Counterfactual Rules for Electing the U.S. President*

ObjectivesWe offer a typology of possible reforms to the Electoral College (EC) in terms of changes to its two most important structural features: seat allocations that are not directly proportional to population and winner‐take‐all outcomes at the state level. This typology allows us to classify four major variants of “reform” to the present EC in a parsimonious fashion. Many of the proposals we consider have been suggested by well‐known figures, some debated in Congress, and they include what we view as most likely to be taken seriously. We evaluate these proposals solely in terms of one simple criterion: “Would they be expected to reduce the likelihood of inversions between EC and popular vote outcomes?”MethodsWe answer this question by looking at the data on actual presidential election outcomes at the state level over the entire period 1868–2016, and at the congressional‐district level over the period 1956–2016. We consider the implications for presidential outcomes of these different alternative mechanisms, in comparison to the actual electoral outcome and the popular vote outcome. In addition, we consider the implications of a proposal to increase the size of the U.S. House (Ladewig and Jasinski, 2008).ResultsOur results show that inversions from the popular vote happen under all proposed alternatives at nearly the same rate as under the current EC rules, with some proposals actually making inversions more frequent.ConclusionsThe major difference between the present EC rule and alternative rules is not in frequency of inversions, but is in which particular years the inversions occur. As for the proposal to increase the size of the House, we show that any realistic increase in House size would have made no difference for the 2016 outcome.

New Caledonia's Independence Referendum: Re-Defining the Future

ABSTRACTThe historic independence referendum that took place on 4 November 2018 in New Caledonia marks the beginning of a potentially four-year self-determination process that is, like the French territory itself, unique. It is the final stage of a series of agreements that ended civil war over independence, and that have overseen peace in New Caledonia for 30 years. The referendum has highlighted the real achievements under the peace agreements, but also areas of deep difference, creating new uncertainties and risks to stability. While the November vote saw majority support for staying with France, it exposed continued ethnic division, with a sizeable Indigenous Kanak vote for independence, despite years of Accord compromises. The referendum is only the first of potentially two more divisive votes by 2022, to be preceded by local provincial elections in May 2019. Whatever the voting outcomes, the majority loyalists must take into account Indigenous independence aspirations in considering the major issues left over after the Noumea Accord's completion, if peaceful governance is to continue. UN decolonization principles present three options: independence, independence in some kind of partnership with France, or continued integration with France. So long as the answer remains ‘no’ to independence, this final process will demand serious dialogue between bitterly opposed parties, at the least about expanded local powers, re-defining governance in New Caledonia beyond the Noumea Accord.

The Public Choice of Public Stadium Financing: Evidence from San Diego Referenda

Local politicians and team owners frequently argue that the public financing of stadiums is important for local economic development. The sports economics literature, however, has largely found that new professional sport facilities do not generate any new net economic activity. We provide context to this literature by exploring the public choice in the public financing of stadiums. In 2016, San Diego had two ballot measures related to the San Diego Chargers. Measure C would allow officials to raise hotel taxes to pay for a new downtown stadium for the Chargers. Measure D would also raise hotel taxes, but explicitly prevented any money being spent on the Chargers. Both measures failed to receive 50% of the votes cast. We find that zip codes with a higher voter turnout were more likely to vote against both measures, highlighting the importance of the timing of referenda in limiting the ability of clearly defined groups, such as Chargers fans, to have a large influence on the voting outcome. Meanwhile, areas with more Trump voters were more likely to support higher taxes for the purpose of building the Chargers a new stadium.

Why voluntary municipal merger projects fail: evidence from popular votes in Switzerland

ABSTRACTWhat determines the failure of local government amalgamation referenda? Existing research suggests that functional pressures act as a push factor towards local territorial reform, whereas considerations of political self-determination exert a pull effect. However, we know little about the respective importance of these countervailing forces. In this paper, I analyze popular vote decisions on mergers of 541 municipalities involved in 166 different merger projects in three Swiss cantons since the new millennium. The results show that both functional pressures and concerns for self-determination are linked to popular vote outcomes: small municipalities are less likely to reject a merger. Concerns for self-determination matter, but only when the pressures of smallness are not overwhelming: a higher vote share of right-wing parties and a preponderance of other municipalities in the merger coalition increase the probability that voters reject a merger project. This has implications for policy-makers’ strategies when drafting and promoting voluntary local amalgamation reforms.

Inferring true voting outcomes in homophilic social networks

Consider a soccer game with spectators in a stadium acting as voters. The spectators are polled to determine whether a ball has crossed a line. Either the ball has crossed, or it has not, but the opinions of individual voters regarding the truth of the matter may differ because of their differing perspectives on the event. Voters positioned far from the event may be unable to accurately assess the outcome compared to those positioned nearby. In practice, however, voters' opinions may not be independently distributed. For example, the voters may talk among themselves before their opinions are gathered. This can distort the distribution of opinions, and introduce correlations into voter reports, preventing recovery of the true outcome. For example, if an announcer states that the ball did cross the line, then voters who did not observe this may report this authoritative opinion rather than their own.