The Influence of Institutions on Corporate Governance Through Private Negotiations: Evidence from Tiaa-Cref

Posted: 18 Jul 1997

See all articles by Willard T. Carleton

Willard T. Carleton

University of Arizona

James M. Nelson

Florida State University - College of Business

Michael S. Weisbach

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: May 1997

Abstract

This paper analyzes the process of private negotiations between financial institutions and companies. It relies on a private database consisting of correspondence between TIAA-CREF and 40 of the firms it contacted during a period from 1992 to 1996. The analysis suggests that private negotiations are extremely important in our understanding of corporate governance. In more than half the cases, the companies agreed to adopt the proposal without even having voted on it. Over 95 percent of the time when TIAA-CREF contacts a company, the company eventually adopts the changes TIAA-CREF requests. TIAA-CREF achieved this high success rate despite only getting a majority vote in one case. Overall, the results cast doubt on the view that predominates in the literature, which states that institutions' efforts to improve corporate governance are ineffective because they rarely "win" proxy contests.

JEL Classification: G34

Suggested Citation

Carleton, Willard T. and Nelson, James M. and Weisbach, Michael S., The Influence of Institutions on Corporate Governance Through Private Negotiations: Evidence from Tiaa-Cref (May 1997). Available at SSRN: https://ssrn.com/abstract=10518

Willard T. Carleton

University of Arizona

Department of History
Tucson, AZ 85721
United States

James M. Nelson (Contact Author)

Florida State University - College of Business ( email )

423 Rovetta Business Building
Tallahassee, FL 32306-1110
United States
850-645-0166 (Phone)

Michael S. Weisbach

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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