The Role of Institutional Investors in Voting: Evidence from the Securities Lending Market

Banaiy

2021

RBGN

Purpose -This paper aims to investigate how shareholder participation in general meetings (SPGM) affects audit quality.Design/methodology/approach -We measure SPGM as the percentage of the ownership represented by the shareholders who attend the general meeting. We measure audit quality by auditor industry specialization, audit firm size, and auditor fees. In order to investigate the relationship between SPGM and audit quality, we use a sample of 576 firm-years from Iran's capital market between 2012 and 2018 and employ multivariate regression analysis.Findings -The findings show that, in general, there is an insignificant relationship between SPGM and audit quality. However, we reveal that there is a positive and significant association between the presence of institutional shareholders in general meetings and audit quality. Furthermore, for the companies with a high presence of institutional shareholders in their general meetings, there is a significant and positive relationship between the participation of other shareholders in the general meetings and audit quality. Our findings are robust in regards to a variety of additional tests.Originality/value -Collectively, the findings reveal that the impact of SPGM on audit quality is conditional to the presence of institutional shareholders in general meetings. The findings provide further insights among the mixed evidence on the beneficial effects of SPGM.

Section: Spgm and Audit Qualitysupporting

confidence: 68%

The beneficial effect of shareholder participation in general meetings: Evidence in the context of audit quality

Banaiy

2021

RBGN

“…Aggarwal et al . () find that institutional investors play a role in strengthening the firm's corporate governance by restricting or calling back their loaned shares prior to the voting record date to exercise their voting right. Kim et al .…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Who monitors opaque borrowers? Debt specialisation, institutional ownership, and information opacity

Platikanova

Soonawalla

2019

Accounting & Finance

In this study, we suggest that the level of information opaqueness determines the propensity of publicly listed firms to have debt financing from only a few debt types (i.e., debt specialisation). Using accruals quality as a proxy for information opaqueness, we find that the degree of debt specialisation is lower for firms with high-quality accruals. This result is consistent with the notion that information collection and monitoring costs are higher for firms that have higher informational opacity, explaining the tendency towards debt specialisation. We further argue that creditors need not monitor borrowers so closely when they are monitored by institutional owners. The empirical findings support this argument and show that firms with more stable institutional ownership are likely to have less specialised debt types. The empirical evidence is also consistent with the expectation that stable institutional ownership is likely to reduce the demand for monitoring over accruals management. Using S&P 500 membership as an exogenous event driving institutional ownership changes, we further document that debt specialisation is decreasing in accruals quality when institutional investors are expected to have an influence.An extensive literature in corporate finance and financial accounting examines the accounting information properties that facilitate access to debt

“…In our forecasting regression, we appeal to the prior literature in our choice of predictive variables. Because Aggarwal, Saffi, and Sturgess (2015) demonstrate the importance of utilization in the equity loan market, we consider prior loan utilization as a key forecasting variable. Moreover, because Geczy, Musto, and Reed (2002) demonstrate the usefulness of prices from new loans, we also consider the loan fees from new loans.…”

Section: Measures Of Short-selling Riskmentioning

confidence: 99%

Short‐Selling Risk

Engelberg¹,

Reed²,

Ringgenberg

2018

The Journal of Finance

182