THE INFLUENCE OF INSTITUTIONS ON CORPORATE GOVERNANCE THROUGH PRIVATENEGOTIATIONS - EVIDENCE FROM TIAA-CREF

This paper analyzes the process of private negotiations between financ ial institutions and the companies they attempt to influence. It relie s on a private database consisting of the correspondence between TIAA- CREF and 45 firms it contacted about governance issues between 1992 an d 1996. This correspondence indicates that TIAA-CREF is able to reach agreements with targeted companies more than 95 percent of the time. I n 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 wi th these agreements.