Behind the Scenes: The Corporate Governance Preferences of Institutional Investors
46 Pages Posted: 15 Mar 2010 Last revised: 3 Feb 2020
Date Written: June 1, 2015
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. Both governance mechanisms are viewed as complementary devices, in which intervention typically will occur prior to a potential exit. We find that long-term investors and investors that are less concerned about stock liquidity intervene more intensively. Finally, most investors use proxy advisors and believe that their information improves their own voting decisions.
Keywords: Institutional investors, corporate governance, shareholder activism
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