Work

Proxy Advisory Firms and Corporate Shareholder Engagement

Year: 2024

Type: article

Abstract: We study how Institutional Shareholder Services (ISS) affect firms’ engagement with shareholders. Our analyses exploit a quasi-natural experiment using say-on-pay voting outcomes near a threshold that triggers ISS to review engagement activities. Firms receiving ISS treatment exhibit swift and substantive increases in extensive and intensive margins of engagement, especially when their boards have higher agency conflicts and directors are more likely to lose voting support from ISS. Increases in engagement persist over time, and shareholders appear to value the increased engagement. Collectively, we shed light on an unexplored channel through which ISS positively influences firms’ governance and information environments.

Source: Review of Financial Studies

DOI: 10.1093/rfs/hhae045

Authors: Aiyesha Dey, Austin Starkweather, Joshua T White

Institutions: Harvard University, University of Tennessee at Knoxville, Vanderbilt University

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: hybrid

Estimated APC paid: $4,229