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The role of institutional investors in voting: evidence from the securities lending market


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Type

Article

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Authors

Aggarwal, P 
Chauffaille Saffi, PA 
Sturgess, J 

Abstract

This paper investigates voting preferences of institutional investors using the unique setting of the securities lending market. Investors restrict lendable supply and/or recall loaned shares prior to the proxy record date to exercise voting rights. Recall is higher for investors with greater incentives to monitor, for firms with poor performance or weak governance, and for proposals where returns to governance are likely higher. At the subsequent vote, recall is associated with less support for management and more support for shareholder proposals. Our results indicate that institutions value their vote and use the proxy process to affect corporate governance.

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Keywords

proxy voting, securities lending, institutional investors, value of the vote

Journal Title

The Journal of Finance

Conference Name

Journal ISSN

0022-1082
1540-6261

Volume Title

70

Publisher

Wiley
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