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Trust and monitoring

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dc.contributor.authorLesmeister, Simon
dc.contributor.authorLimbach, Peter
dc.contributor.authorGoergen, Marc
dc.contributor.funderVanderbilt University
dc.contributor.funderUniversity of Antwerp
dc.contributor.funderIvey Business School
dc.contributor.funderWestern University
dc.contributor.funderAgencia Estatal de InvestigaciĂłn
dc.contributor.rorhttps://ror.org/02jjdwm75
dc.date.accessioned2024-07-08T13:14:15Z
dc.date.available2024-07-08T13:14:15Z
dc.date.issued2022
dc.description.abstractWe show that in countries with more societal trust shareholders cast fewer votes at shareholder meetings and are more supportive of management proposals. This result is confirmed by instrumental variable regressions. It also holds at the U.S.-county level and for voting by U.S. institutional investors. Lower monitoring via voting relates less negatively to future firm performance in high-trust countries,suggesting that managers do not exploit greater discretion when trust is high. We also find a negative relation between trust and bond spreads. Our evidence supports theory arguing that trust substitutes for monitoring and has implications for investors’ optimal monitoring effort. © 2022
dc.description.fundingtypeWe are grateful for helpful comments to James Cox, Mohamad Faour, Luc Renneboog, Elvira Scarlat and Dirk Sliwka, as well as participants at seminars at the CFR, IE Business School, the Universities of Birmingham, Surrey and Wuppertal, the 21st Annual Law and Business Conference on the Future of Corporate Governance at Vanderbilt University, the 15th Corporate Finance Day at the University of Antwerp, the 27th Finance Forum in Madrid, the 19th Workshop on Corporate Governance & Investment at the University of the Balearic Isles, the 2018 Corporate Governance and Corporate Finance Workshop at Sheffield University Management School, the 2018 Workshop on Corporate Governance & the Capital Allocation Process Within Society at the HHL Leipzig Center for Corporate Governance, the 2019 FMA European Conference and the 2019 annual meetings of the German Finance Association. The research reported in this paper was partially funded by the Spanish State Research Agency (AEI/10.13039/501100011033) Grant No. PID2020-115982RB-C22. We are grateful for helpful comments to James Cox, Mohamad Faour, Luc Renneboog, Elvira Scarlat and Dirk Sliwka, as well as participants at seminars at the CFR, IE Business School, the Universities of Birmingham, Surrey and Wuppertal, the 21st Annual Law and Business Conference on the Future of Corporate Governance at Vanderbilt University, the 15th Corporate Finance Day at the University of Antwerp, the 27th Finance Forum in Madrid, the 19th Workshop on Corporate Governance & Investment at the University of the Balearic Isles, the 2018 Corporate Governance and Corporate Finance Workshop at Sheffield University Management School, the 2018 Workshop on Corporate Governance & the Capital Allocation Process Within Society at the HHL Leipzig Center for Corporate Governance, the 2019 FMA European Conference and the 2019 annual meetings of the German Finance Association. The research reported in this paper was partially funded by the Spanish State Research Agency (AEI/10.13039/501100011033) Grant No. PID2020-115982RB-C22.
dc.description.keywordCulture
dc.description.keywordMonitoring
dc.description.keywordShareholder expropriation
dc.description.keywordShareholder voting
dc.description.keywordSocietal trust
dc.formatapplication/pdf
dc.identifier.doihttps://doi.org/10.1016/j.jbankfin.2022.106587
dc.identifier.issn3784266
dc.identifier.officialurlhttps://www.scopus.com/inward/record.uri?eid=2-s2.0-85133296106&doi=10.1016%2fj.jbankfin.2022.106587&partnerID=40&md5=0eb2eada6d6ef8ea165f83e50e7fdfc5
dc.identifier.urihttps://hdl.handle.net/20.500.14417/3035
dc.journal.titleJournal of Banking and Finance
dc.language.isoeng
dc.page.total8
dc.publisherElsevier B.V.
dc.relation.departmentFinance
dc.relation.entityIE University
dc.relation.projectIDAEI: AEI/10.13039/501100011033
dc.relation.projectID PID2020-115982RB-C22
dc.relation.schoolIE Business School
dc.rightsAttribution-NonCommercial-NoDerivatives 4.0 International
dc.rights.accessRightsinfo:eu-repo/semantics/openAccess
dc.rights.urihttps://creativecommons.org/licenses/by-nc-nd/4.0/
dc.subjectCulture; Monitoring; Shareholder expropriation; Shareholder voting; Societal trust
dc.subject.keywordCulture
dc.subject.keywordMonitoring
dc.subject.keywordShareholder expropriation
dc.subject.keywordShareholder voting
dc.subject.keywordSocietal trust
dc.titleTrust and monitoring
dc.typeinfo:eu-repo/semantics/article
dc.version.typeinfo:eu-repo/semantics/publishedVersion
dc.volume.number143
dspace.entity.typePublication
person.identifier.scopus-author-id57269585000
person.identifier.scopus-author-id55973121700
person.identifier.scopus-author-id12769685300
relation.isAuthorOfPublication55eb0faa-13da-4a35-a432-f529b62f4d8b
relation.isAuthorOfPublication.latestForDiscovery55eb0faa-13da-4a35-a432-f529b62f4d8b
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