corporate governance and firm performance evidence from.pdfVIP

Title KOREA Author(s)LEE, SANGLAE Citation Issue Date2015-06 Type Departmental Bulletin Paper Text Versionpublisher URL /10086/27195 Right Hitotsubashi University Repository Hitotsubashi Journal of Economics 56 (2015), pp.35-53. Ⓒ Hitotsubashi University CORPORATE GOVERNANCE AND FIRM PERFORMANCE: EVIDENCE FROM INSTITUTIONAL INVESTORS AND PROXY VOTING IN KOREA SANGLAE LEE Department of Business Administration, Chonbuk National University Jeonju 56 -756, South Korea sllee7@ Received March 2014; Accepted July 2014 Abstract This paper investigates the role of institutional investors as corporate monitors by analyzing the relationship between proxy voting decisions and firm performance in Korea. We find that institutional investors support more proposals when firm performance is strong. They are more likely to support the proposals when ownership of the blockholder and foreign investors are high. It suggests that institutional investors monitor firms through active voting on the proposals relating to performance. On the contrary, National Pension Serviceʼ ffirmative voting decisions is negatively related to firm performance. Furthermore, we also find that institutional investorsʼ voting is significantly related to the long-term performance and impact the pass of proposal and they more carefully monitor financially distressed firm. Keywords : proxy voting, firm performance, corporate governance, institutional investors, National Pension Service JEL Classifi cation Codes: G23, G30, G3