Abstract
The annual general meeting (AGM) constitutes the most important corporate event. Nevertheless, its role as an efficient instrument for corporate governance has recently come under increasing scrutiny, and numerous proposals for reform have emerged as a result. The purpose of this paper is to assess the release of value-relevant information during the AGM by analysing its impact on returns, returns volatility, and trading volumes in a sample of common- and civil-law countries. In one of the most influential articles in the field of corporate governance, La Porta et al. (J Polit Econ 106:1113–1155, 1998) examine the relationship between legal systems and shareholder protection. Given the importance of a country’s legal tradition regarding not only shareholders’ rights but also the role they play in the company, we cannot assume on a prior basis that results obtained in countries in which the legal tradition is based on the common law, like the US and the UK, can be directly extrapolated to countries with different legal traditions. Our results emphasise the role of national idiosyncratic characteristics in the relevance of the AGM, although only among civil-law countries. Common-law countries, on the other hand, would show a more similar behaviour.
Similar content being viewed by others
References
Ahern, K. R. (2009). Sample selection and event study estimation. Journal of Empirical Finance, 16, 466–482.
Ball, R., Kothari, S., & Robin, A. (2000). The effect of international institutional factors on properties of accounting earnings. Journal of Accounting and Economics, 29, 1–51.
Ball, R., & Shivakumar, L. (2008). Earnings quality at initial public offerings. Journal of Accounting and Economics, 45(2–3), 324–349.
Beaver, W. (1968). The information content of annual earnings announcements. Journal of Accounting Research, 6, 67–92.
Brickley, J. (1985). Interpreting common stock returns around proxy statement disclosures and annual shareholder meetings. Journal of Financial and Quantitative Analysis, 25(3), 343–349.
Brown, S., & Warner, J. (1985). Using daily stock returns: The case of event studies. Journal of Financial Economics, 14, 3–31.
Catasus, B., & Johed, G. (2007). Annual general meetings-rituals of closure or ideal speech situations? A dual analysis. Scandinavian Journal of Management, 23(2), 168–190.
Corrado, C. (1989). A nonparametric test for abnormal security-price performance in event studies. Journal of Financial Economics, 23, 385–395.
Corrado, C. J., & Zivney, T. L. (1992). The specification and power of the sign test in event study hypothesis tests using daily stock returns. Journal of Financial and Quantitative Analysis, 27(3), 465–478.
DeFond, M., Hung, M., & Trezevant, R. (2007). Investor protection and the information content of annual earnings announcements: International evidence. Journal of Accounting and Economics, 43(1), 37–67.
Djankov, S., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2008). The law and economics of self-dealing. Journal of Financial Economics, 88, 430–465.
Firth, M. (1981). The relative information content of the release of financial results data by firms. Journal of Accounting Research, 19(2), 521–529.
Garcia-Blandon, J., Martinez-Blasco, M., & Argiles-Bosch, J. M. (2011). The role of annual general meetings in a civil-law country. In J. Kose & A. K. Makhija (Eds.), International corporate governance (Advances in Financial Economics, vol. 14.) (pp. 87–108). UK: Emerald Group Publishing Limited.
Garcia-Blandon, J., Martinez-Blasco, M., & Argiles-Bosch, J. M. (2012). Does the annual general meeting involve the release of relevant information in non-common law markets? Evidence from Spain. Revista Española de Financiación y Contabilidad, 153, 209–232.
Kalay, A., & Loewenstein, U. (1985). Predictable events and excess returns: The case of dividend announcement. Journal of Financial Economics, 14, 423–449.
Kim, O., & Verrecchia, R. E. (1991). Trading volume and price reactions to public announcements. Journal of Accounting Research, 29(2), 302–321.
Kolari, J. W., & Pynnonen, S. (2010). Event study testing with cross-sectional correlation of abnormal returns. The Review of Financial Studies, 23(11), 3996–4025.
Kyle, A. (1985). Continuous auctions and insider trading. Econometrica, 53, 1315–1335.
La Porta, R., Lopez-de-Silanes, F., Pop-Eleches, C., & Shleifer, A. (2003). Judicial checks and balances. National Bureau of Economic Research Working Paper 9775.
La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (1998). Law and finance. Journal of Political Economy, 106, 1113–1155.
La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (2000). Investor protection and corporate governance. Journal of Financial Economics, 58, 3–27.
Leech, D., & Manjon, M. C. (2002). Corporate governance in Spain (with an application of the power indices approach). European Journal of Law and Economics, 13, 157–173.
Menendez, S. (2005). Market valuation of the analysts’ recommendations: The Spanish stock market. Applied Financial Economics, 15, 509–518.
Olibe, K. O. (2002). The information content of annual general meetings: A price and trading volume analysis. Journal of International Accounting, Auditing and Taxation, 11, 19–37.
Richart-Ramón, A., Martínez-Blasco, M., & García-Blandón, J. (2011). Análisis de la Producción Científica sobre Gobierno Corporativo a través de ISI Web of Science. Revista Española de Documentación Científica, 34(1), 79–101.
Rippington, F., & Taffler, R. (1995). The information content of firm financial disclosures. Journal of Business Finance and Accounting, 22(3), 345–362.
Stratling, R. (2003). General meetings: A dispensable tool for corporate governance of listed companies? Corporate Governance: An International Review, 11, 74–82.
Venkataraman, R., Weber, J., & Willenborg, M. (2008). Litigation risk, audit quality, and audit fees: Evidence from initial public offerings. The Accounting Review, 83(5), 1315–1345.
Acknowledgments
The authors would like to thank the reviewers for their comments that helped to improve the manuscript.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Martinez-Blasco, M., Garcia-Blandon, J. & Argiles-Bosch, J.M. Does the informational role of the annual general meeting depend on a country’s legal tradition?. J Manag Gov 19, 849–873 (2015). https://doi.org/10.1007/s10997-014-9294-9
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10997-014-9294-9