De Facto Voting Power and the Value of Voting Rights

We document high persistence in shareholder turnout, creating predictable differences in effective voting power across firms. Accordingly, firms with lower turnout exhibit higher voting premia. For identification, we exploit the 2010 NYSE Rule 452 amendment eliminating broker authority over uninstructed shares as a shock to turnout in director elections. Further, we show that low turnout predicts contentious governance events where shareholder influence is more valuable, and that the negative voting premium-turnout relation is stronger when such events are more likely. Results indicate that investors price de facto voting power and that persistent shareholder participation shape the value of corporate control.