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Trust and shareholder voting

Simon Lesmeister, Peter Limbach and Marc Goergen

No 18-02, CFR Working Papers from University of Cologne, Centre for Financial Research (CFR)

Abstract: We test the hypothesis whether a specific aspect of culture – trust in others – affects shareholder voting behavior by substituting for costly monitoring. We find consistent evidence that the percentage of votes cast at shareholder meetings is lower in high-trust countries while the percentage of votes in support of management proposals is higher. Shocks to trust and IV regressions confirm these results. We also find that shareholder voting is more valuable in lowtrust countries, as reflected by a more positive effect on future firm performance, which suggests that managers do not exploit lower levels of monitoring when trust is high.

Keywords: Culture; Monitoring; Shareholder expropriation; Shareholder voting; Trust (search for similar items in EconPapers)
JEL-codes: G3 G19 G32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hpe and nep-soc
Date: 2019
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