Investors' Attention to Corporate Governance
Review of Financial Studies, forthcoming
83 Pages Posted: 27 Apr 2018 Last revised: 23 Nov 2020
Date Written: November 22, 2020
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: Suggested Citation