CORPORATE GOVERNANCE THROUGH THE PROXY PROCESS - EVIDENCE FROM THE 1989 HONEYWELL PROXY SOLICITATION

This paper analyzes a proxy solicitation and subsequent restructuring at Honeywell Inc. in 1989. The solicitation was financed and led by noninstitutional investors and co-sponsored by two public pension funds. The solicitation and restructuring both appear to increase firm value, though the effects of the restructuring are much larger. The voting records of Honeywell's 72 largest institutional shareholders reveal that banks and insurance companies are significantly more supportive of two management-sponsored antitakeover proposals than public pension funds and independent investment managers. Existing business ties between Honeywell and its institutional investors, however, do not appear to explain these voting differences.