Mandatory Voting, Large Shareholder Power, and Wolf Packs.

Summary Our model develops a theory of how the existence of systematic voters who always vote, besides partisans who vote strategically, affects the outcome of general meetings. Depending on the shareholder structure, we show that systematic voting has two opposite consequences on the outcomes of the meeting. It reinforces the power of the largest group of systematic voters. Less expectedly, it also creates an incentive for partisans to vote and oppose together this same group. We apply our results to different ownership structures. In particular, we emphasize the importance, for the board, of having the support of the largest partisan, the role of proxy advisors, and examine the conditions under which blockholders can successfully oppose the largest group of systematic voters alone or together (wolf pack).