Behind the Scenes: The Corporate Governance Preferences of Institutional Investors
We survey institutional investors to better understand their role in the corporate governance of firms. Consistent with a number of theories, we document widespread behind-the-scenes intervention as well as governance-motivated exit. These governance mechanisms are viewed as complementary devices, w...
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| Published in: | The Journal of finance (New York) Vol. 71; no. 6; pp. 2905 - 2932 |
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| Main Authors: | , , |
| Format: | Journal Article |
| Language: | English |
| Published: |
Cambridge
Blackwell Publishing Ltd
01-12-2016
Wiley Periodicals, Inc Blackwell Publishers Inc |
| Subjects: | |
| Online Access: | Get full text |
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| Summary: | We survey institutional investors to better understand their role in the corporate governance of firms. Consistent with a number of theories, we document widespread behind-the-scenes intervention as well as governance-motivated exit. These governance mechanisms are viewed as complementary devices, with intervention typically occurring prior to a potential exit. We further find that long-term investors and investors that are less concerned about stock liquidity intervene more intensively. Finally, we find that most investors use proxy advisors and believe that the information provided by such advisors improves their own voting decisions. |
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| Bibliography: | ArticleID:JOFI12393 Appendix S1: Internet Appendix ark:/67375/WNG-2FGB41PW-P istex:6FA7D76A2BB86E24A24BB49FFFA6A2E2222F07E2 Journal of Finance s disclosure policy and have no conflicts of interest to disclose. Joseph McCahery is with Tilburg University. Zacharias Sautner is at the Frankfurt School of Finance & Management. Laura T. Starks is at the McCombs School of Business, University of Texas at Austin. This manuscript is a revision of an earlier version circulated under the same name but based on a different survey. We are grateful to Campbell Harvey, John Graham, Michael Roberts, an Associate Editor, anonymous referees, those who helped distribute our survey, and most of all, to the anonymous respondents to the survey. We would also like to thank Donna Anderson, Marco Becht, Alon Brav, Stephen Brown, Mark Coffeldt, Jonathan Feigelson, Merrit Fox, Stuart Gillan, Allaudeen Hameed, Bram Hendricks, Paulus Ingram, Jacqueline Johnson, Sanford Leeds, Amir Licht, Florencio Lopez‐de‐Silanes, Enrico Perotti, Randall Thomas, and David Yermack for additional help with the survey design and delivery. We further benefitted from the comments of Renee Adams, Ines Chaieb, Steve Choi, Amil Dasgupta, Alex Edmans, Rüdiger Fahlenbrach, Miguel Ferreira, Marc Gabarro, Mariassunta Giannetti, Ross Levine, Kai Li, Florencio Lopez‐de‐Silanes, Ernst Maug, Alexander Nagornov, Enrico Perotti, Luc Renneboog, Armin Schwienbacher, Holger Spamann, René Stulz, Randall Thomas, Jaap Winter, and seminar participants at the ABFER Meetings, French Finance Association Meetings, AFA Meetings, EFA Meetings, FMA Asia, FIRS, ALEA Meetings, Harvard Conference on Corporate Governance, the Conferences on Innovation and Business Law, the Rotterdam Workshop on Executive Compensation and Corporate Governance, the Vanderbilt/Amsterdam Conference in Cagliari, the LUISS/Tilburg Conference in Rome, WU Endowment Conference, Ohio State University, Seoul National University, ETH Zurich, University of Melbourne, University of Amsterdam, and University of Queensland. We have read the ObjectType-Article-1 SourceType-Scholarly Journals-1 ObjectType-Feature-2 content type line 23 |
| ISSN: | 0022-1082 1540-6261 |
| DOI: | 10.1111/jofi.12393 |