The Influence of Institutions on Corporate Governance through Private Negotiations: Evidence from TIAA-CREF


  • Willard T. Carleton,

  • James M. Nelson,

  • Michael S. Weisbach

    1. University of Arizona
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    • All authors are at the University of Arizona. We are extremely grateful to Dick Schlefer and Rita Gorman at TIAA-CREF for their help throughout the research process, especially in gathering the sample we use in this paper. We are also grateful to Virginia Rosenbaum of the Investor Responsibility Research Center for providing us with data to verify corporate governance changes. We thank Jeff Coles, Ed Dyl, Ned Elton, Jennifer Hawkins, Steve Kaplan, Harold Mulherin, Anil Shivdasani, René Stulz, Jose Suay, Sunil Wahal, Elliott Weiss, Marc Zenner, and participants in seminars at the American Finance Association meetings, the Financial Management Association meetings, the University of Arizona, Arizona State University, and the University of South Florida for helpful comments. Weisbach acknowledges financial support from the NSF (Grant SBR-9616675).


This paper analyzes the process of private negotiations between financial institutions and the companies they attempt to influence. It relies on a private database consisting of the correspondence between TIAA-CREF and 45 firms it contacted about governance issues between 1992 and 1996. This correspondence indicates that TIAA-CREF is able to reach agreements with targeted companies more than 95 percent of the time. In more than 70 percent of the cases, this agreement is reached without shareholders voting on the proposal. We verify independently that at least 87 percent of the targets subsequently took actions to comply with these agreements.