Picking Friends Before Picking (Proxy) Fights: How Mutual Fund Voting Shapes Proxy Contests
2018; RELX Group (Netherlands); Linguagem: Inglês
10.2139/ssrn.3101473
ISSN1556-5068
AutoresAlon Brav, Wei Jiang, Tao Li, James Pinnington,
Tópico(s)Financial Markets and Investment Strategies
ResumoThis paper provides the first comprehensive study of mutual fund voting in proxy contests. Funds tend to vote against incumbent management at firms with weak operating and financial performance, and in favor of dissidents with credible track records. Passive funds are active monitors although they are more supportive of incumbent management than active funds. We document a positive selection effect: dissidents are more likely to initiate contests and proceed to voting when shareholders are expected to be more supportive based on observable and unobservable event characteristics as well as inherent pro-activist investor stance. Overall, institutional investors play a pivotal role in shaping the initiation and outcomes of proxy contests.
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