Educational Networks, Mutual Fund Voting Patterns, and CEO Compensation

50 Pages Posted: 3 Aug 2008 Last revised: 17 Jan 2012

Alexander W. Butler

Rice University - Jesse H. Jones Graduate School of Business

Umit G. Gurun

University of Texas at Dallas - Naveen Jindal School of Management

Date Written: Jan 15, 2012

Abstract

Mutual funds whose managers are in the same educational network as the firm’s CEO are more likely to vote against shareholder-initiated proposals to limit executive compensation than out-of-network funds. This voting propensity is stronger when voting among the funds in a family is not unanimous. Furthermore, CEOs of firms with relatively high levels of educationally connected mutual fund ownership have higher levels of compensation than their unconnected counterparts. This aspect of executive compensation is related to both the abnormal trading performance of the connected investors in the firm and the perceived quality of firm management by the connected investors.

Keywords: executive compensation, social connections, share voting

JEL Classification: G34

Suggested Citation

Butler, Alexander W. and Gurun, Umit G., Educational Networks, Mutual Fund Voting Patterns, and CEO Compensation (Jan 15, 2012). Available at SSRN: https://ssrn.com/abstract=1195202 or http://dx.doi.org/10.2139/ssrn.1195202

Alexander W. Butler (Contact Author)

Rice University - Jesse H. Jones Graduate School of Business ( email )

MS 531
Houston, TX 77005
United States
713-348-6341 (Phone)

HOME PAGE: http://www.owlnet.rice.edu/~awbutler/

Umit G. Gurun

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

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