TY - JOUR
T1 - Impact of Asset Management Companies’ Exercise of Voting Rights on Corporate value
AU - Yi, Junesuh
N1 - Publisher Copyright:
© 2019, Korean Securities Association. All rights reserved.
PY - 2019/12
Y1 - 2019/12
N2 - This study examines the effects of asset management companies’ exercise of voting rights on corporate value. An analysis of 50,198 asset management company votes and 388,486 individual fund votes from 2013 to 2017 reveals that the company rejection rate of firm proposals in shareholder general meetings has more than doubled, from 1.47% in 2013 to 3.29% in 2017. The rejection rates of agendas such as dividend payout, M&A, and appointment of executives are relatively high, whereas the rejection rates of financial statement approval and executive compensation are low. An analysis of the market reaction to asset management companies’ exercise of rejection voting rights indicates that the firm’s stock price shows excess return on the day of the general meeting and that it continues to rise for the following five days. The rate of cumulative abnormal returns was also statistically significantly positive, especially in 2017. In terms of agendas, there is a positive market reaction to M&A and appointment of executives but a negative reaction to dividend payouts. This paper also finds that foreign or non-chaebol-affiliated asset management companies further exercise the opposite voting right on proposals, resulting in more positive market reactions.
AB - This study examines the effects of asset management companies’ exercise of voting rights on corporate value. An analysis of 50,198 asset management company votes and 388,486 individual fund votes from 2013 to 2017 reveals that the company rejection rate of firm proposals in shareholder general meetings has more than doubled, from 1.47% in 2013 to 3.29% in 2017. The rejection rates of agendas such as dividend payout, M&A, and appointment of executives are relatively high, whereas the rejection rates of financial statement approval and executive compensation are low. An analysis of the market reaction to asset management companies’ exercise of rejection voting rights indicates that the firm’s stock price shows excess return on the day of the general meeting and that it continues to rise for the following five days. The rate of cumulative abnormal returns was also statistically significantly positive, especially in 2017. In terms of agendas, there is a positive market reaction to M&A and appointment of executives but a negative reaction to dividend payouts. This paper also finds that foreign or non-chaebol-affiliated asset management companies further exercise the opposite voting right on proposals, resulting in more positive market reactions.
KW - Asset Management Company
KW - Firm Value
KW - Market Response
KW - Stewardship Code
KW - Voting Rights
UR - http://www.scopus.com/inward/record.url?scp=85146359027&partnerID=8YFLogxK
U2 - 10.26845/KJFS.2019.12.48.6.697
DO - 10.26845/KJFS.2019.12.48.6.697
M3 - Article
AN - SCOPUS:85146359027
SN - 2005-8187
VL - 48
SP - 697
EP - 720
JO - Korean Journal of Financial Studies
JF - Korean Journal of Financial Studies
IS - 6
ER -