Trust and Shareholder Voting

Trust and Shareholder Voting

Simon Lesmeister, Peter Limbach, Marc Goergen

Series number :

Serial Number: 

Date posted :

July 28 2018

Last revised :

September 16 2019
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  • culture • 
  • monitoring • 
  • Shareholder expropriation • 
  • Shareholder voting • 
  • trust

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 shocks to trust and instrumental variables. It also holds at the U.S.-county level and for U.S. institutional investor voting on management proposals.

Further, low shareholder participation and less dissent voting relate less negatively to future firm performance in high-trust countries, suggesting that managers do not exploit lower monitoring levels when trust is high. Our evidence supports theory according to which trust substitutes for monitoring and has implications for investors’ optimal voting effort.


Real name:
Simon Lesmeister
Real name:
Peter Limbach
University of Cologne and Centre for Financial Research (CFR)