EconPapers    
Economics at your fingertips  
 

Collective Action and Governance Activism

Craig Doidge, Alexander Dyck, Hamed Mahmudi and Aazam Virani

Review of Finance, 2019, vol. 23, issue 5, 893-933

Abstract: We examine how an investor collective action organization (ICAO) enhances activism by institutional investors. The ICAO initiated a new form of engagement—private meetings with independent directors to discuss governance proposals. Compared with a single investor acting alone, the ICAO has stronger incentives to engage in activism. Its dollar holdings and voting power are six times larger and predict direct access to the board and the firms it engages. Firms engaged by the ICAO are at least 58% more likely than non-engaged firms to adopt the ICAO’s governance proposals that include adoption of majority voting, say-on-pay, and specific compensation policies. Engaged firms also increase CEO incentive pay. An event study around the announcement of the ICAO’s formation shows a positive impact on value that increases in both dollar holdings and voting power. We conclude that institutional investors improve governance outcomes through collective action.

Keywords: Collective action; Corporate governance; Institutional investor activism (search for similar items in EconPapers)
JEL-codes: G34 G23 (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1093/rof/rfz008 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:revfin:v:23:y:2019:i:5:p:893-933.

Ordering information: This journal article can be ordered from
http://www.oup.co.uk/journals

Access Statistics for this article

Review of Finance is currently edited by Josef ZechnerEditor-Name: Marco Pagano

More articles in Review of Finance from European Finance Association Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().

 
Page updated 2019-11-07
Handle: RePEc:oup:revfin:v:23:y:2019:i:5:p:893-933.