| I examine the effect of the institutional investors' investment horizon on corporate governance. I find that institutional blockholders who hold a firm's shares for a longer duration exert a greater influence over the firm's governance practices. Long-term presence of institutional blockholders increases the likelihood of a firm's adoption of the best practice, particularly those governance standards that are related to board structure, ownership structure, and progressive practices. I also find that the investment duration is an important incentive for institutional investors to engage in activism regardless of their type. My findings contribute to the prior research on shareholder activism by providing further evidence on the relation between institutional investors and a broad range of corporate governance practices. |
