Investors' Attention to Corporate Governance

Review of Financial Studies, forthcoming

83 Pages Posted: 27 Apr 2018 Last revised: 23 Nov 2020

See all articles by Peter Iliev

Peter Iliev

Pennsylvania State University - Department of Finance

Jonathan Kalodimos

Oregon State University - College of Business

Michelle Lowry

Drexel University; European Corporate Governance Institute (ECGI)

Date Written: November 22, 2020

Abstract

Using unique data on investor views of EDGAR company filings, we document that many investors devote significant effort towards governance research. However, investors’ monitoring is focused disproportionately on large firms and firms with meetings outside the busy spring proxy season. Using an instrumental variables approach that isolates the drop of governance attention during the busy proxy season, we show that governance research is related to investors’ monitoring of firms, through both voice and exit. Moreover, governance research disciplines management into reduced investments and increased payouts. The concentration of attention results in joint monitoring of a relatively small subset of firms.

Keywords: Corporate Governance, Governance Research, Agency, Institutional Investors, ISS

JEL Classification: G30, G34

Suggested Citation

Iliev, Peter and Kalodimos, Jonathan and Lowry, Michelle B., Investors' Attention to Corporate Governance (November 22, 2020). Review of Financial Studies, forthcoming, Available at SSRN: https://ssrn.com/abstract=3162407 or http://dx.doi.org/10.2139/ssrn.3162407

Peter Iliev

Pennsylvania State University - Department of Finance ( email )

348 Business Building
University Park, PA 16802
United States

Jonathan Kalodimos

Oregon State University - College of Business ( email )

Corvallis, OR 97331
United States

Michelle B. Lowry (Contact Author)

Drexel University ( email )

Philadelphia, PA 19104
United States
215-895-6070 (Phone)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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