Does the informational role of the Annual General Meeting depend on a country's legal tradition?

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.