46 Pages Posted: 15 Mar 2010 Last revised: 7 Jul 2015
Date Written: June 2015
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.
Keywords: Institutional investors, corporate governance, shareholder activism
Suggested Citation: Suggested Citation
McCahery, Joseph A. and Sautner, Zacharias and Starks, Laura T., Behind the Scenes: The Corporate Governance Preferences of Institutional Investors (June 2015). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1571046 or http://dx.doi.org/10.2139/ssrn.1571046
By Alex Edmans