Institutional Investors and Corporate Governance: The Incentive to Be Engaged
By Jonathan Lewellen, Katharina Lewellen. Journal of Finance, 2018
183 citations recorded by the source corpus.
This paper studies institutional investors’ incentives to be engaged shareholders. We measure incentives as the increase in an institution’s cash flow (management fees) when a stockholding increases 1% in value, considering both the direct effect on assets under management and the indirect effect on subsequent fund flows. By 2015, the average institution gains roughly $143,100 in annual cash flow if a firm in its portfolio rises 1%. The estimates range from $22,300 for small institutions (who hold relatively concentrated portfolios) to $335,900 for the largest institutions (with more diffuse holdings). Institutional shareholders in one firm often gain when rival firms in the industry do well, by virtue of the institution’s holdings in those firms, but the effects are modest in the most concentrated industries. Our estimates suggest that institutional investors often have strong incentives to be active shareholders.
Subfields: Accounting
View Paper: https://www.semanticscholar.org/paper/adc067a522b114d0b8e836106eda7e3018267f01
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Accounting
- Michelle René Lowry
- Katharina Lewellen
- Jay R. Ritter
- K. Hanley
- Thomas J. Chemmanur
- Gerard Hoberg
- Jie He
- Xiaoyun Yu
Citations in the corpus
- Common Ownership, Competition, and Top Management Incentives (2016, unknown): “(2019), Aslan (2019), Torshizi and Clapp (2019), Li et al. (2020), and Eldar et al.”
- Who’s Paying Attention? Measuring Common Ownership and Its Impact on Managerial Incentives (2019, unknown): “This feature also differentiates our approach from Lewellen and Lewellen (2018), who argue that common owners themselves perhaps do not have incentives to internalize externalities.”
- Does common ownership really increase firm coordination? (2020, background): “12 (this approach is similar to Gilje, Gormley, and Levit (2020) and Lewellen and Lewellen (2019)).”