Universität zu Köln

Lesmeister, Simon, Limbach, Peter ORCID: 0000-0001-9914-7771 and Goergen, Marc ORCID: 0000-0003-4391-2651 (2022). Trust and monitoring. J. Bank Financ., 143. AMSTERDAM: ELSEVIER. ISSN 1872-6372

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Abstract

We 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. (c) 2022 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license ( http://creativecommons.org/licenses/by/4.0/ )

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Lesmeister, Simon UNSPECIFIED UNSPECIFIED UNSPECIFIED Limbach, Peter UNSPECIFIED orcid.org/0000-0001-9914-7771 UNSPECIFIED Goergen, Marc UNSPECIFIED orcid.org/0000-0003-4391-2651 UNSPECIFIED
URN:	urn:nbn:de:hbz:38-681950
DOI:	10.1016/j.jbankfin.2022.106587
Journal or Publication Title:	J. Bank Financ.
Volume:	143
Date:	2022
Publisher:	ELSEVIER
Place of Publication:	AMSTERDAM
ISSN:	1872-6372
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language CORPORATE GOVERNANCE; HIDDEN COSTS; CULTURE; LAW; NORMS; RECIPROCITY; PROTECTION; VALUES; FIRMS Multiple languages Business, Finance; Economics Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/68195