Behind the Scenes: The Corporate Governance Preferences of Institutional Investors

McCahery, J.A.; Sautner, Zacharias; Starks, Laura T.

doi:10.1111/jofi.12393

Cited by 1,003 publications

(464 citation statements)

References 89 publications

Supporting

Mentioning

428

Contrasting

Unclassified

Order By: Relevance

“…We conduct these pairwise tests throughout for all survey questions with answers that allow a rank-order interpretation (see the survey questions in Tables 1, 8 , 9, 10, 11, 13 and 14) to avoid misinterpretation of their relative importance if ratings are statistically similar. See McCahery, Sautner, and Starks (2016) and Dichev et al (2013) for related tests. 1988; Milgrom and Roberts, 1988;Meyer, Milgrom, and Roberts, 1992;Scharfstein and Stein, 2000 When further examining the interrelation between agency problems and capital budgeting below, we employ a composite measure of the perceived level of within-firm agency problems.…”

Section: Asymmetric Information and Agency Problems Inside The Firmmentioning

confidence: 99%

The Economics of Capital Allocation in Firms: Evidence from Internal Capital Markets

2017

View full text Add to dashboard Cite

We analyze a unique survey dataset to examine the (micro)foundations of capital allocation in firms. Firms employ systems of interconnected measures to counteract agency problems, including layers of approval, divisional budgets, reporting requirements, and compensation schemes. When making funding decisions, top management relies heavily on top-level, nonfinancial information. However, substantial parts of the capital budget do not require top management approval as firms trade off the benefits and costs of decentralization. Even firms with active internal capital markets tilt capital allocation toward relatively even distributions. Within-firm agency problems may result in divisions' restricted access to internal capital. AbstractWe analyze a unique survey dataset to examine the (micro)foundations of capital allocation in firms. Firms employ systems of interconnected measures to counteract agency problems, including layers of approval, divisional budgets, reporting requirements, and compensation schemes. When making funding decisions, top management relies heavily on top-level, nonfinancial information. However, substantial parts of the capital budget do not require top management approval as firms trade off the benefits and costs of decentralization. Even firms with active internal capital markets tilt capital allocation toward relatively even distributions. Within-firm agency problems may result in divisions' restricted access to internal capital.

show abstract

Section: Asymmetric Information and Agency Problems Inside The Firmmentioning

confidence: 99%

The Economics of Capital Allocation in Firms: Evidence from Internal Capital Markets

2017

View full text Add to dashboard Cite

show abstract

“…McCahery, Sautner, and Starks (2016) find that institutional investors intervene behind the scenes in governance and exit if they are unhappy about governance. They also document that most investors use proxy advisers for voting.…”

Section: Literature Reviewmentioning

confidence: 99%

Testing for Competitive Effects of Common Ownership

Gramlich

Grundl

2017

FEDS

View full text Add to dashboard Cite

We propose an alternative approach for analyzing the competitive effects of common ownership: to directly analyze the weights that firms place on each others' profits rather than using measures of industry concentration (MHHI and GHHI). Analyzing weights has at least three advantages: it places fewer restrictions on the nature of competition, it requires less data to test, and it circumvents endogeneity concerns with concentration measures.We apply our approach to data from the banking industry, and our preliminary results mixed and overall rather muted. The sign of the competitive effect is sensitive to specification, and the effects we estimate are economically quite small.Firms upon which significant weight is placed -either by themselves or competitors -move very little in price or quantity distributions. PRELIMINARY -PLEASE DO NOT CITE OR DISTRIBUTE WITHOUT PERMISSIONJEL Codes:

show abstract

“…Further, ownership identity and firm performance (when measured by return on asset) had a significant endogeneity problem. McCahery et al (2010) found that corporate governance is important to institutional investors' investment decisions and the majority is willing to engage in shareholder activism. They examined institutional investors' portfolio holdings, and found that their investment decisions appear to be related to their revealed preferences.…”

Section: Ownership Identitymentioning

confidence: 99%

Study on theories and mechanisms of corporate governance

Mishra

Kapil

2017

IJAAPE

View full text Add to dashboard Cite

This paper aims to review the theories of corporate governance for understanding the theoretical basis of corporate governance mechanisms. Major theoretical studies on corporate governance, including studies done in emerging economies, are included in the review. The paper looks at corporate governance theories from value creation point of view. It is observed that the two perspectives of corporate governance, i.e., shareholder and stakeholder perspectives, are not in contrast to each other but are pointing towards the same goal, i.e., value creation. However, one points towards value creation for shareholders and the other points towards creation of societal value. While reviewing theoretical underpinnings and assumptions for corporate governance perspectives, due consideration has been given to the development of corporate governance mechanism based on various existing theories. A theoretical framework for understanding the relationship between corporate governance mechanism and corporate performance has been proposed. Emerging challenges for corporate governance theories have also been indicated. This being a review paper, one of the major limitations is an unintentional omission of some literature because of non-availability or non-reachability. Literature that would have been present in languages other than English could also not been included in the review.

show abstract

Behind the Scenes: The Corporate Governance Preferences of Institutional Investors

Cited by 1,003 publications

References 89 publications

The Economics of Capital Allocation in Firms: Evidence from Internal Capital Markets

The Economics of Capital Allocation in Firms: Evidence from Internal Capital Markets

Testing for Competitive Effects of Common Ownership

Study on theories and mechanisms of corporate governance

Contact Info

Product

Resources

About