This forum includes three papers that examine auditor ratification by shareholders. All three papers are motivated by the recent calls for mandatory auditor ratification and by concerns about recent Securities and Exchange Commission (SEC) staff “No Action” letters allowing companies to block ratification votes from the proxy statement. The forum papers examine observable inputs and outcomes of these ratification votes to inform the public and policy makers about the potential consequences of these votes.
Public companies have discretion as to whether they submit their auditor to an annual vote of the shareholders. Shareholders can submit a request for such a vote through the proxy process, but in many cases, the SEC staff is now granting exemptions to companies, allowing them to exclude such votes (Brown 2011). They do so through so-called “No Action” letters. That is, the company can omit the ratification vote, even when shareholders request such...
