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

Miriam Schwartz-Ziv*, Russ Wermers

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

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.

Original languageAmerican English
Article number106532
JournalJournal of Banking and Finance
Volume141
DOIs
StatePublished - Aug 2022

Bibliographical note

Publisher Copyright:
© 2022

Keywords

  • Institutional investors
  • Say-on-pay
  • Shareholder's votes
  • Small shareholders

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