TheCorporateCounsel.net

You might think that with all the negative attention from regulators about audit quality issues over the past few years, shareholders might be a little more hesitant to vote in favor of proposals to ratify auditors.  However, according to a recent Ideagen/Audit Analytics report, if you thought that, you’d be wrong:

Throughout the last six years, our analysis on shareholder votes reveals that, on average, nearly 98% of total votes are cast in favor of auditor ratification. Shareholder votes filed between January 1, 2021 and December 31, 2023, continued that trend for a sixth consecutive year. Votes against auditor ratification comprised 1.7% of the total votes; abstained votes account for the remaining 0.4% of total shareholder votes cast.

In fairness, the percentage of proposals in which more than 5% of the outstanding shares voted against ratification of the auditors ticked up last year from 7% to 8%, but that still leaves 92% of proposals in which fewer than 5% of the outstanding shares were voted against ratification. Maybe shareholders ought to be a little more reluctant to toe the party line here, because a 2023 study found that higher than expected shareholder dissatisfaction with external auditors is associated with improved audit quality.

– John Jenkins