Strategic Voting and Informational Rents: Evidence from Mutual Funds' Trades and Votes

We examine whether informed shareholders sometimes vote strategically against their private information to preserve its value for trading. Using mutual funds' trading and voting records, we identify this behavior by a fund's tendency to buy (sell) shares after losing (winning) a contentious vote. We find that post-vote net buying by strategic voters positively predicts subsequent abnormal stock returns, while the alignment of vote outcomes with their votes negatively predicts returns. Our findings suggest that these funds possess private information and strategically vote against it, highlighting a key friction in shareholder democracy where the pursuit of trading profits can weaken corporate governance.

Keywords: Proxy voting, Strategic voting, Corporate governance, Mutual funds, Information aggregation

JEL Classification: G34, G23, G14

Suggested Citation: Suggested Citation

Gao, Meng and Huang, Jiekun and Pi, Shaoting, Strategic Voting and Informational Rents: Evidence from Mutual Funds' Trades and Votes (June 04, 2026). European Corporate Governance Institute – Finance Working Paper No. 1089/2025, HKU Jockey Club Enterprise Sustainability Global Research Institute Paper No. 2025/144, Available at SSRN: https://ssrn.com/abstract=5047603 or http://dx.doi.org/10.2139/ssrn.5047603