Mutual Funds as Monitors: Evidence From Mutual Fund Voting

47 Pages Posted: 8 Jul 2009

See all articles by Angela Morgan

Angela Morgan

Clemson University - Department of Finance

Annette B. Poulsen

University of Georgia - Department of Banking and Finance; European Corporate Governance Institute (ECGI)

Jack G. Wolf

Clemson University - Department of Finance

Tina Yang

University of South Florida - Muma College of Business

Multiple version iconThere are 2 versions of this paper

Date Written: July 7, 2009

Abstract

We address whether mutual funds act effectively through the proxy voting process by supporting wealth increasing items. We examine 212,620 voting decisions made by 1,794 mutual funds from 94 fund families for 1,047 shareholder proposals voted on between July 2003 and June 2005. We find that mutual funds vote more affirmatively for wealth increasing proposals and that funds’ voting approval rates for these beneficial resolutions are significantly higher than those of other investors. Additionally, fund families do not appear to vote uniformly for proposal types and funds may not always vote consistently within fund families with the characteristics of the fund influencing its role as monitor. Funds also support proposals targeting firms with weak governance. Finally, fund voting approval rates significantly impact whether a proposal passes and whether one is implemented. Our findings provide support for mutual funds being effective monitors.

Keywords: Proxy voting, mutual funds, corporate governance, shareholder proposals

JEL Classification: G32, G34, J33

Suggested Citation

Morgan, Angela and Poulsen, Annette B. and Wolf, Jack G. and Yang, Tina, Mutual Funds as Monitors: Evidence From Mutual Fund Voting (July 7, 2009). Available at SSRN: https://ssrn.com/abstract=1431072 or http://dx.doi.org/10.2139/ssrn.1431072

Angela Morgan (Contact Author)

Clemson University - Department of Finance ( email )

Clemson, SC 29634
United States
(864) 656-2249 (Phone)
(864) 656-3748 (Fax)

Annette B. Poulsen

University of Georgia - Department of Banking and Finance ( email )

Terry College of Business
Department of Finance
Athens, GA 30602-6253
United States
706-542-4450 (Phone)

HOME PAGE: http://www.terry.uga.edu/directory/profile/apoulsen/

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Jack G. Wolf

Clemson University - Department of Finance ( email )

324-A Sirrine Hall
Clemson, SC 29634
United States
864-656-3954 (Phone)
864-656-3748 (Fax)

Tina Yang

University of South Florida - Muma College of Business ( email )

140 7th Ave S
St. Petersburg, FL 33701
United States
7278734568 (Phone)

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