Brickley, Lease and Smith examine voting patterns of institutional shareholders on antitakeover amendments. The authors are particularly interested in institutional shareholders (i.e. mutual funds, pension funds, endowments) because they often do not take an active role in the voting process, but rather follow the Wall Street Rule (either voting with managers or selling their stock in the case of policy disagreements) when voting on antitakeover provisions.
The authors find that that institutional investors and other outside blockholders (large shareholders) vote more actively on antitakeover amendments than non-blockholders. The authors document a strong positive correlation between the level of institutional ownership and and the percentage …show more content…
They found that mutual funds, pension funds, endowments, and public pension funds (institutional investors) are more likely to oppose management when compared to financial institutions like banks, insurance companies and trusts. Institutional investors are less subject to management influence when compared to banks or insurance companies, which frequently derive revenues from lines of business under management control. These finds suggest that the management of some of the financial institutions face conflicts of interest between their fiduciary responsibility to their stock beneficiaries and other objectives such as value maximization for the owners of the institution. An analysis of stock returns and the adoption of an antitakeover provision are also examined. Generally, proposals having the most negative abnormal returns are made by firms with the highest level of management blockholders. The authors offer two possible explanations for the correlation between the adoption of a negative antitakeover amendment and stock returns:
1. Managers are more likely to propose bad amendments where management support is greater and institutional opposition is
The authors find that that institutional investors and other outside blockholders (large shareholders) vote more actively on antitakeover amendments than non-blockholders. The authors document a strong positive correlation between the level of institutional ownership and and the percentage …show more content…
They found that mutual funds, pension funds, endowments, and public pension funds (institutional investors) are more likely to oppose management when compared to financial institutions like banks, insurance companies and trusts. Institutional investors are less subject to management influence when compared to banks or insurance companies, which frequently derive revenues from lines of business under management control. These finds suggest that the management of some of the financial institutions face conflicts of interest between their fiduciary responsibility to their stock beneficiaries and other objectives such as value maximization for the owners of the institution. An analysis of stock returns and the adoption of an antitakeover provision are also examined. Generally, proposals having the most negative abnormal returns are made by firms with the highest level of management blockholders. The authors offer two possible explanations for the correlation between the adoption of a negative antitakeover amendment and stock returns:
1. Managers are more likely to propose bad amendments where management support is greater and institutional opposition is