| The Management Monitoring Effect of Institutional Investors' No Vote |
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Han Nah Kim, Kang Heum Yon |
| 기관투자자 의결권 반대행사의 경영진 견제효과 |
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김한나, 연강흠 |
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| Abstract |
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This paper studied the shareholder activism of institutional investors who had opposed firms` proposal in a shareholder meeting for the period from 2005 to 2011. We analyzed how the stock price of a target firm would be changed by the no vote of institutional investors. The results are as follows: Institutional investors` votes against a firm`s proposal generally resulted in the market`s positive reaction to the target firm`s stock price. These findings coincide with the institutional investors` monitoring hypothesis. The positive market reaction is stronger as the proportion of the no vote items to total items increases. The positive market reaction is greater when the no vote on a proposal is rejected at a general meeting of shareholders. The monitoring hypothesis is confirmed by the regression analysis with cumulative abnormal returns on the occasion of shareholder meetings. The institutional investors` no vote, thus, functions well as one of the external governance structure and need to attract active exercise of institutional investors` vote. For this, we need to extend the notice for convocation of meeting of shareholders, to make full use of the various channel of notifying item, to utilize a guideline for exercising the right to vote, and to be supported by a shareholder advisory firm or proxy advisory services. |
| Key Words:
경영진 견제효과,기관투자자,기관투자자의 의결권 행사,대리인 문제,주주행동주의,Agency Problem,Institutional Investors,Institutional Investors` No Vote,Management Monitering Effect,Shareholder`s Activism |
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