WASHINGTON, March 18, 2015 (GLOBE NEWSWIRE) -- BlackRock Inc. and the National Association of Corporate Directors (NACD) today announced the winners of their Global Challenge for Innovation in Corporate Governance. The winning paper, titled "The Role of Institutional Investors in Voting: Evidence from the Securities Lending Market," was authored by Reena Aggarwal (Georgetown University), Pedro A.C. Saffi (University of Cambridge), and Jason Sturgess (DePaul University).
The winners will be recognized at the upcoming NACD Strategy & Risk Forum, which will take place on May 12–13 in San Diego, CA. This event will bring corporate directors and general counsel together with leading experts in the fields of cybersecurity and strategy to discuss the most critical risk-related issues affecting today's boardrooms. For more information and details on how to attend, see www.NACDonline.org/StrategyAndRisk.
"The roles and expectations of corporate directors have evolved dramatically over the past decade, and this paper will help directors to interpret actions by institutional investors," said Ken Daly, CEO of NACD. "As the advocate for the profession of directorship, NACD is privileged to work with directors to help them translate the utterly unknown to the merely uncertain."
The winning paper uses data from the securities lending market to examine how institutional investors influence the proxy voting process. The authors then correlate that data with proxy record dates in order to highlight the mechanisms used by institutional investors to impact corporate governance, mechanisms that are typically imperceptible and thus difficult to study. This research is particularly relevant during a period that has seen increased emphasis on shareholder activism.
The following list contains some of the paper's key findings:
- Lendable supply generally shrinks prior to proxy voting and returns to normal after the record date.
- Institutional investors value the right to vote and therefore recall shares during the proxy voting period in order to retain their voting rights.
- There is a positive correlation between share recall and investors' lack of support for management in voting outcomes.
- There is a 40% higher recall effect associated with corporate control-related proposals.
- Lenders not only make money by lending but also lose voting power; they must therefore weigh the decision to lend against the importance of proxy items up for vote.
These conclusions and others in this study show the need for investors to be well informed about proxy items long before the record date. They also suggest the need for corporations and their leaders to be proactive in conveying relevant information in a timely manner.
The BlackRock / NACD global call for papers invited governance practitioners and members of the academic community to submit studies that focused on innovative ways for corporate boards and institutional investors to respond to global disruptors—the unpredictable economic, geopolitical, competitive, technological, social/demographic, and environmental forces or events that create rapid change in the marketplace.
Leading corporate directors, governance practitioners, and academics evaluated all submissions on the basis of how effectively the ideas presented could be implemented to enhance corporate governance and responsible investment practices. The winners of the competition will receive $5,000.
To download the winning paper, visit www.NACDonline.org/2015WinningPaper.
About BlackRock
BlackRock is a leader in investment management, risk management, and advisory services for institutional and retail clients worldwide. On December 31, 2014, BlackRock's AUM was $4.652 trillion. BlackRock helps clients meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, iShares® (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk-management, advisory, and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. Headquartered in New York City, the firm has approximately 12,200 employees in more than 30 countries and a major presence in key global markets, including North and South America, Europe, Asia, Australia, the Middle East, and Africa. For additional information, visit www.BlackRock.com.
About NACD
The National Association of Corporate Directors (NACD) is the advocate for the profession of directorship and is focused on advancing exemplary board leadership. Informed by more than 35 years of experience, NACD delivers insights and resources that more than 15,000 corporate director members rely on to make sound strategic decisions and confidently confront complex business challenges. NACD provides world-class director education programs, national peer-exchange forums, and proprietary research to promote director professionalism, ultimately enhancing the economic sustainability of the enterprise and bolstering stakeholder confidence. Fostering collaboration among directors, investors, and governance stakeholders, NACD is shaping the future of board leadership. To learn more about NACD, visit www.NACDonline.org. To become an NACD member, contact Kelly Dodd at kkdodd@NACDonline.org or 202-380-1891.