Shareholder proposals targeting dual-class firms receive far less voting support due to the superior voting rights of insiders. Anticipating extremely low passing rates, managers in dual-class firms advance more proposals to the voting stage. Proposals being voted on is a positive signal that attracts public attention and enhances reputation. Hence, shareholder sponsors target dual-class firms to exploit higher voting-stage probability when they expect substantial reputational gains, which explains the puzzle of dual-class proposal submission. Our model and empirical evidence fit this story nicely and reveal its heterogeneity by proposal and sponsor types. Further exploration shows that the reputation surge following dual-class proposal voting alters the pattern of the ensuing single-class proposals by the same sponsor but does not translate into significant stock market reactions.

When firms switch industries, many financial databases retroactively apply the latest industry classifiers to all previous years. This study examines the effect of this systematic error on panel data estimation with industry-by-year fixed effects. I provide a theoretical framework and utilize simulated data to study the properties of the within estimator, expressing it as a function of the weighted average of all fixed effects. We find that the asymptotic bias increases monotonically with the probability of industry switching, as well as with the number of industries and time periods. Additionally, our results indicate a higher probability of Type I error. Our analysis extends to a broader context, illustrating the impact of measurement error in fixed effect models.