The Influence of Institutions on Corporate Governance through Private Negotiations: Evidence from TIAA-CREF

Abstract:     
This paper analyzes the process of private negotiations between financial institutions and the companies they attempt to influence. It relies on a private database consisting of the correspondence between TIAA-CREF and 45 firms it contacted about governance issues between 1992 and 1996. This correspondence indicates that TIAA-CREF is able to reach agreements with targeted companies over 95% of the time. In over 70% of the cases, this agreement is reached without shareholders ever voting on the proposal. We verify independently that at least 87% percent of the targets subsequently took actions to comply with these agreements.

JEL Classification: G31, G32, G34

Accepted Paper Series