This chapter considers the consequences of the low-to-non-existent marginal value of shareholders’ individual voting power in America’s widely held companies. It reviews the empirical literature on rational ignorance and rational irrationality in civic voting. It argues that we should expect similar levels of ignorance and irrationality in shareholder voting. The chapter then considers the evidence for this ignorance and irrationality in: (1) various measures of the value shareholder put on their voting rights; (2) what appears to drive voting outcomes in uncontested director elections; (3) the failure of shareholders to meaningfully hold directors accountable for failures and fraud; (4) the changes in the voting behavior of shareholders once majority voting is introduced; (5) shareholder responses to boards refusing to accept the resignation of a director who loses an election; (6) the evidence that contested director elections (proxy fights) have nothing to do with corporate governance; (7) the ways the economic decisions of shareholders are at variance with their voting behavior; and (8) the evidence shareholders do not pay attention to their own votes, and generally try to keep them purely symbolic.

Does agency cost theory work in the real world? The various hypotheses drawn from agency cost theory are considered in light of the relevant empirical evidence. Agency cost theory appears to be able to explain almost anything, but it predicts nothing.