Miriam Schwartz-Ziv, Russ Wermers,
Do institutional investors monitor their large-scale vs. small-scale investments differently? Evidence from the say-on-pay vote,
Journal of Banking & Finance,
Volume 141,
2022,
106532,
ISSN 0378-4266,
https://doi.org/10.1016/j.jbankfin.2022.106532.
(https://www.sciencedirect.com/science/article/pii/S0378426622001261)
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.
Keywords: Shareholder's votes; Say-on-pay; Institutional investors; Small shareholders