`A PhD at NHH is a fantastic opportunity´
After only six months as a PhD candidate, Lene Mortensen received an award for her research project. `Highly promising, ´ noted the committee.
When Norway’s Sovereign Wealth Fund Speaks Up, the Market Listens
A new study shows that share prices rise when NBIM announces its intention to vote against corporate management. `The market sees it as a sign that someone is watching, ´ says NHH researcher Tzu-Ting Chiu.
One year ago, NBIM announced that it would vote against Tesla’s proposed $56 billion pay package for Elon Musk.
Serious about ownership
The announcement received widespread international media coverage – and is one of several examples showing that NBIM’s voting decisions attract attention.
`It’s interesting that these cases don’t just spark debate. We can now state that they also have the potential to affect share prices. This shows that the market values it when major institutions like NBIM take ownership seriously,´ says Tzu-Ting Chiu.
Chiu is an Associate Professor at the Department of Accounting, Auditing and Law at NHH.
Share prices increase
The study The Value of Dissent: Market Reaction to Voting Intention Disclosures is conducted by researchers at NHH and the London School of Economics and Political Science. It is the first to examine how financial markets react when NBIM pre-discloses its voting intentions ahead of company AGMs.
The fund has a small stake in more than 8,500 companies across countries, sectors and currencies worldwide.
The Value of Dissent
The Value of Dissent: Market Reaction to Voting Intention Disclosures by Tzu-Ting Chiu (NHH), Xi Li (LSE), Rusha Nandy (NHH), and Simone Traini (NHH). Both Chiu, Nandy and Traini are researchers at the Department of Accounting, Auditing and Law.
Of about 700 pre-disclosed votes for close-call proposals in the period 2021–2023, NBIM signaled dissent in about 33% of these cases – meaning they intended to vote against management.
`We observe a positive market reaction to such announcements. On average, share prices increase by 0.6 to 1.5 percent, ´ says Chiu.
The effect is strongest when firms have weak corporate governance, when NBIM holds a significant stake, or when proposals are related to capital structure and board independence.
Government Pension Fund Global
The Government Pension Fund Global is one of the world's largest funds. The fund has a small stake in more than 8 500 companies across countries, sectors and currencies worldwide. The fund is now one of the world’s largest investors.
Investments are spread across most markets, countries and currencies to achieve broad exposure to global growth and value creation while ensuring good risk diversification. The fund invests only abroad so that the Norwegian economy does not overheat.
`These findings suggest that investors perceive dissent votes from an influential institutional shareholder as value-enhancing, particularly in situations where external monitoring is considered valuable. ´
Transparency makes a difference
While many large institutional investors vote behind closed doors, NBIM stands out.
It publishes all its voting intentions five days before shareholder meetings. According to the researchers, this transparency is key to the market response.
`When NBIM speaks out, the market interprets it as someone holding the board accountable. It builds expectations that governance will improve and that shareholder interests are being safeguarded,´ says Chiu.
A concrete example
One concrete example cited in the study is the German industrial company Wacker Neuson. In 2022, NBIM opposed a management proposal for new capital authorization – and the proposal was ultimately voted down.
`This is one of the few cases where a management-backed proposal failed. It shows that NBIM’s voting dissent is not just symbolic but could influence outcomes in some cases,´ says Chiu.
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According to the NHH researcher, the study provides support for NBIM’s strategy as an active owner – and may offer valuable insights for institutional investors globally.
`Our findings show that NBIM’s voting and transparency have a real impact on stock markets,´ she says.