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Behind the Scenes: The Corporate Governance Preferences of Institutional Investors
Author(s) -
McCAHERY JOSEPH A.,
SAUTNER ZACHARIAS,
STARKS LAURA T.
Publication year - 2016
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/jofi.12393
Subject(s) - corporate governance , institutional investor , voting , business , proxy (statistics) , market liquidity , accounting , intervention (counseling) , stock (firearms) , proxy voting , finance , political science , politics , psychology , law , mechanical engineering , group voting ticket , machine learning , psychiatry , computer science , engineering
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. These governance mechanisms are viewed as complementary devices, with intervention typically occurring prior to a potential exit. We further find that long‐term investors and investors that are less concerned about stock liquidity intervene more intensively. Finally, we find that most investors use proxy advisors and believe that the information provided by such advisors improves their own voting decisions.