Behind the Scenes: The Corporate Governance Preferences of Institutional Investors
Joseph A. McCahery
Tilburg University - School of Law; European Banking Center (EBC); European Corporate Governance Institute (ECGI); Duisenberg School of Finance; Tilburg Law and Economics Center (TILEC)
Frankfurt School of Finance & Management gemeinnützige GmbH
Laura T. Starks
University of Texas at Austin - Department of Finance
Journal of Finance, Forthcoming
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. Both governance mechanisms are viewed as complementary devices, in which intervention typically will occur prior to a potential exit. We find that long-term investors and investors that are less concerned about stock liquidity intervene more intensively. Finally, most investors use proxy advisors and believe that their information improves their own voting decisions.
Number of Pages in PDF File: 46
Keywords: Institutional investors, corporate governance, shareholder activism
Date posted: March 15, 2010 ; Last revised: July 7, 2015
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