Proxy Contests: Are They Close Encounters of the Worst Kind?

This essay considers some of the negative effects of proxy contests and emphasizes that the proxy contest should be the choice of last resort. When costs are weighed against benefits, it would seem that there are better and cheaper ways for owners and managers to communicate and settle their differences. Recent research on this topic is considered and suggestions for research to judge the long‐term effects of proxy contests are offered. The essay concludes with some thoughts on how newly emerging corporate governance schemes may eventually obviate the need for proxy contests.