The Role of Mutual Funds in Corporate Governance: Evidence from Mutual Funds’ Proxy Voting and Trading Behavior
University of Alberta - Department of Finance and Statistical Analysis
University of California, Riverside
December 23, 2013
This paper examines mutual fund families’ proxy voting records to analyze their choices between voting against management and “voting with their feet” (i.e., exit). Despite the fact that proxy voting is a scenario in favor of governance through voting than through exit, we provide evidence that both exit and voting are important governance mechanisms when management’s recommendations on proposals conflict with those of Institutional Shareholder Services. Funds with smaller ownership blocks and shorter investment horizon are more likely to exit and funds are more likely to exit small, liquid firms with greater insider and other institutional ownership.
Number of Pages in PDF File: 45
Keywords: mutual funds, proxy voting, trading, governance
JEL Classification: G23, G34working papers series
Date posted: July 25, 2011 ; Last revised: December 25, 2013
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