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)
Laura T. Starks
University of Texas at Austin - Department of Finance
University of Amsterdam - University of Amsterdam Business School; Duisenberg School of Finance; Tinbergen Institute
December 13, 2010
AFA 2011 Denver Meetings Paper
Tilburg Law School Research Paper No. 010/2010
Institutional investors are a dominant force in financial markets today, yet their preferences about corporate governance are generally undisclosed and their activities in this area tend to be performed behind the scenes. We conduct a survey to elicit institutional investors’ views on investor protection and corporate governance. We find that among the institutions that respond to our survey, corporate governance is important to their investment decisions and the majority are willing to engage in shareholder activism. When we examine institutional investors’ portfolio holdings, we find that their investment decisions appear to be related to their revealed preferences.
Number of Pages in PDF File: 70
Keywords: Institutional investors, corporate governance, shareholder activismworking papers series
Date posted: March 15, 2010 ; Last revised: January 2, 2011
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