L&G also doesn't buy the argument, but for different reasons:
investors ‘voting with their feet’, is the most commonly cited reason for a lack of engagement. However, while this action is possibly logical for shareholders who are not closely connected with the management of a company, we feel it misses the point. Investors typically start their engagement process by meeting a company before an investment is made. Prevention is the best way of solving corporate governance concerns and if investors wait until something has gone wrong before they start to engage, it will often be too late to solve the problem.
The whole thing is worth a read.