The role of institutional investors in voting: evidence from the securities lending market
The Journal of Finance
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Aggarwal, P., Saffi, P., & Sturgess, J. (2015). The role of institutional investors in voting: evidence from the securities lending market. The Journal of Finance, 70 (5), 2309-2346. https://doi.org/10.1111/jofi.12284
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.
External DOI: https://doi.org/10.1111/jofi.12284
This record's URL: https://www.repository.cam.ac.uk/handle/1810/247728