Voting Rationales

87 Pages Posted: 29 Jul 2023 Last revised: 24 Oct 2024

See all articles by Roni Michaely

Roni Michaely

The University of Hong Kong; ECGI

Silvina Rubio

University of Bristol Business School

Irene Yi

University of Toronto

Date Written: July 26, 2023

Abstract

Why do institutional investors vote the way they vote? Using a novel dataset on institutional investors' voting rationales, we provide direct evidence on the motivation for institutions' votes in director elections. The main reasons for opposition are lack of independence and diversity. Concerns raised in rationales reflect firms' governance weaknesses: companies with low board gender diversity receive more rationales on diversity, with similar results for independence, tenure, busyness, and CEO duality. Companies listen and change board composition in the direction stated in voting rationales. Results suggest many institutions make independent voting decisions with merits, and firms address investors' concerns.

Keywords: institutional investors, voting, voting rationales, corporate governance

JEL Classification: G11, G23, G30

Suggested Citation

Michaely, Roni and Rubio, Silvina and Yi, Irene, Voting Rationales (July 26, 2023). European Corporate Governance Institute – Finance Working Paper No. 928/2023, HKU Jockey Club Enterprise Sustainability Global Research Institute - Archive, Available at SSRN: https://ssrn.com/abstract=4521854 or http://dx.doi.org/10.2139/ssrn.4521854

Roni Michaely

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

ECGI ( email )

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

Silvina Rubio (Contact Author)

University of Bristol Business School ( email )

Queen's Ave
Bristol, BS8 1SD
United Kingdom

Irene Yi

University of Toronto ( email )

Toronto
Canada

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