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Do institutional investors monitor their large-scale vs. small-scale investments differently? Evidence from the say-on-pay vote

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  • Schwartz-Ziv, Miriam
  • Wermers, Russ

Abstract

We examine the relation between an institution's stock ownership and its tendency to support corporate management through the “Say-on-Pay” (SOP) executive compensation vote. Institutional advisors are more likely to oppose management on the SOP vote for their small-scale investments, i.e., investments that comprise a small fraction of an institution's aggregate stockholdings across its funds, or, alternatively, investments that comprise a small fraction of the total equity market capitalization of a corporation. We find evidence indicating that this voting pattern reflects an institutions’ overall sentiment for the stock, and is particularly prevalent when institutions have limited attention to monitor their investments.

Suggested Citation

  • Schwartz-Ziv, Miriam & Wermers, Russ, 2022. "Do institutional investors monitor their large-scale vs. small-scale investments differently? Evidence from the say-on-pay vote," Journal of Banking & Finance, Elsevier, vol. 141(C).
    • Handle: RePEc:eee:jbfina:v:141:y:2022:i:c:s0378426622001261
    DOI: 10.1016/j.jbankfin.2022.106532
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    Cited by:

    1. Xiaohui Li & Yao Shen & Jing Xie, 2024. "Proxy Voting on CEO Pay: Evidence from Rejection of the Inevitable Disclosure Doctrine," Working Papers 202412, University of Macau, Faculty of Business Administration.
    2. Zhang, Rongwu & Fu, Wenqiang, 2023. "Multiple large shareholders and corporate environmental performance," Finance Research Letters, Elsevier, vol. 51(C).
    3. Meera Behera & Vikram Nanda & Oded Palmon, 2022. "Disciplinary shocks: say-on-pay and the role of large shareholders," Review of Quantitative Finance and Accounting, Springer, vol. 59(4), pages 1453-1499, November.

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    More about this item

    Keywords

    Shareholder's votes; Say-on-pay; Institutional investors; Small shareholders;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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