Analyzing the determinants of the voting behavior using a genetic algorithm

Abstract

Using data about votes emitted by funds in meetings held by United States banks from 2003 to 2013, we apply a genetic algorithm to a set of financial variables in order to detect the determinants of the vote direction. Our findings indicate that there are three main explanatory factors: the market value of the firm, the shareholder activism measured as the total number of funds voting, and the temporal context, which reflects the influence of recent critical events affecting the banking industry, including bankruptcies, reputational failures, and mergers and acquisitions. As a result, considering that voting behavior has been empirically linked to reputational harms, these findings can be considered as a useful insight about the keys that should be taken into account in order to achieve an effective reputational risk management strategy