Corporate Vote Trading in Australia

Abstract

This study finds that institutional investors in Australia recall loaned shares prior to shareholder meetings to exercise their voting rights as part of their effort to improve corporate governance. Recalls are increasingly common in larger firms, firms with more independent directors, and stocks with higher past returns in recent years. Recalls are associated with less support for resolutions at meetings, especially those related to the remuneration package in firms within the ASX100 and those with existing shareholder dissent. We deduce the value of votes (around 351 bps per annum) from the incremental cost of borrowing shares with voting rights around shareholder meetings.

Keywords: Equity lending, shareholder meeting, corporate vote premium, corporate governance

JEL Classification: G10, G12, G14, G34