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http://ssrn.com/abstract=1571046
 
 

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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)

Zacharias Sautner


Frankfurt School of Finance & Management gemeinnützige GmbH

Laura T. Starks


University of Texas at Austin - Department of Finance

October 21, 2014

Tilburg Law School Research Paper No. 010/2010
AFA 2011 Denver Meetings Paper

Abstract:     
We survey institutional investors to understand the applicability of theories and inferred indirect empirical evidence regarding their role in the corporate governance of firms. Consistent with theories, we document widespread behind-the-scenes intervention and governance-motivated exit, which are viewed as complementary devices, equal in importance, in which intervention typically precedes exit. Further, institutional investors believe that the threat of exit is an important disciplinary device. We also find that investor and investment characteristics matter for the intensity of intervention, particularly horizon and liquidity. Finally, investors generally use proxy advisors and believe the information their advisors provide improves their voting decisions.

Number of Pages in PDF File: 60

Keywords: Institutional investors, corporate governance, shareholder activism

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Date posted: March 15, 2010 ; Last revised: October 21, 2014

Suggested Citation

McCahery, Joseph A. and Sautner, Zacharias and Starks, Laura T., Behind the Scenes: The Corporate Governance Preferences of Institutional Investors (October 21, 2014). Tilburg Law School Research Paper No. 010/2010; AFA 2011 Denver Meetings Paper. Available at SSRN: http://ssrn.com/abstract=1571046 or http://dx.doi.org/10.2139/ssrn.1571046

Contact Information

Joseph A. McCahery
Tilburg University - School of Law; European Banking Center (EBC) ( email )
Warandelaan 2
Tilburg, 5000 LE
Netherlands
+31-(0)13-466-2306 (Phone)
+31-(0)13-466-2323 (Fax)
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Duisenberg School of Finance ( email )
Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands
Tilburg Law and Economics Center (TILEC)
Warandelaan 2
Tilburg, 5000 LE
Netherlands
Zacharias Sautner (Contact Author)
Frankfurt School of Finance & Management gemeinnützige GmbH ( email )
Sonnemannstraße 9-11
Frankfurt am Main, 60314
Germany
Laura T. Starks
University of Texas at Austin - Department of Finance ( email )
Red McCombs School of Business
Austin, TX 78712
United States
512-471-5899 (Phone)
512-471-5073 (Fax)
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