Institutional shareholders, proxy advisor recommendation, and vote outcomes in shareholder meetings
Journal
Research in International Business and Finance
Journal Volume
66
Start Page
102002
ISSN
0275-5319
Date Issued
2023-10
Author(s)
DOI
10.1016/j.ribaf.2023.102002
Abstract
Our investigations into the shareholder meetings of UK indexed companies indicate that vote outcomes become more sensitive to proxy advisor recommendations as ownership by well-diversified foreign institutions increases. Vote sensitivity is associated especially with ownership by well-diversified institutional investors that speak a different language. The results support the recent regulatory focus on proxy advisory firms and on how institutional investors manage their fiduciary duties. The findings are supported by firm*agenda fixed-effects models, matching analyses of director election, alternative definitions of portfolio diversification, and examination of specific countries’ institutions that reduce endogeneity biases. French and Japanese data also show qualitatively the same result.
Subjects
Institutional investor
Language
Portfolio diversification
Proxy advice
Shareholder meeting
Publisher
Elsevier BV
Type
conference paper