Institutional investors’ activism under concentrated ownership and the role of proxy advisors. Evidence from the Italian say-on-pay

Massimo Belcredi, Stefano Bozzi, Angela Ciavarella, Valerio Novembre

Risultato della ricerca: Contributo in rivistaArticolo in rivista

Abstract

Where corporate ownership is concentrated, the incentives for institutional shareholders to engage with firms in their portfolio are not clear a priori. Making use of a unique dataset of Say-on-Pay (SOP) votes in Italian listed firms, we provide evidence that specific classes of institutional investors do actively monitor investee firms under concentrated ownership, and that Proxy Advisors (PAs) perform an informational role: i) while general shareholder dissent on SOP is low, dissent by mutual and pension funds holding small equity positions (nonblockholders) is high; ii) nonblockholders’ dissent is negatively correlated with ownership concentration, suggesting that they tend to trust control shareholders to act as delegated monitors on managerial remuneration; iii) voting by institutional investors is strongly correlated with PA recommendations; iv) institutional investors do not follow PA recommendations blindly but look at specific reasons of concern expressed in PA reports. Our results may have relevant policy implications.
Lingua originaleEnglish
pagine (da-a)41-57
Numero di pagine17
RivistaCORPORATE OWNERSHIP & CONTROL
Volume14
DOI
Stato di pubblicazionePubblicato - 2017

Keywords

  • Shareholder Activism, Institutional Investors, Proxy Advisors, Say-On-Pay, Corporate Governance

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