Amsterdam TI Finance Research Seminars

Speaker(s)
Karl Lins (University of Utah)
Date
2010-11-30
Location
Amsterdam

Shareholder voting is one of the fundamental mechanisms through which corporate governance is exercised, yet to date it has not been systematically analyzed across countries. We study the votes cast by U.S. institutional investors in elections held by 5,351 firms across 55 countries to assess the impact of internal (firm-level) and external (country-level) corporate governance on shareholder voting patterns. The propensity to vote against management recommendations increases with managerial entrenchment, indicating that firm-level governance plays an important role in voting decisions for firms domiciled from around the world. This effect is stronger when external country-level governance is relatively weak. Further, we provide evidence that independent proxy voting recommendations are closely linked to the voting patterns of shares held in non-U.S. firms, and this effect is also stronger for firms domiciled in countries with weak external governance.