Investors’ Attention to Corporate Governance

The “Wall Street Walk” and shareholder activism: Exit as a form of voice

Peter Iliev, Jonathan Kalodimos and Michelle Lowry ()

The Review of Financial Studies, 2021, vol. 34, issue 12, 5581-5628

Abstract: Using unique data on investor views of EDGAR company filings, we document that many investors engage in governance research. However, investors’ monitoring is disproportionately focused on large firms and firms with meetings outside the busy spring proxy season. Using an instrumental variables approach that isolates the drop in governance attention during the busy proxy season, we show that governance research is related to investors’ monitoring of firms, through voice and exit. Moreover, governance research disciplines management, who, as a result, reduce investments and increase payouts. The concentration of attention results in joint monitoring of a relatively small subset of firms.

JEL-codes: G30 G34 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (17)

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