47 Pages Posted: 25 Jul 2011 Last revised: 30 Jul 2015
Date Written: June 24, 2014
This paper examines mutual fund families’ proxy voting records to analyze their choices between voting against management (“voice”) and voting with their feet (“exit”). Even though proxy voting is particularly conducive to governance through voice rather than exit, we provide evidence that both exit and voice are important governance mechanisms when Institutional Shareholder Services recommends voting against management. Funds with smaller ownership blocks and shorter investment horizons are more likely to exit, and funds are more likely to exit small, liquid firms with greater insider ownership.
Keywords: mutual funds, proxy voting, exit, governance
JEL Classification: G23, G34
Suggested Citation: Suggested Citation
Duan, Ying and Jiao, Yawen, The Role of Mutual Funds in Corporate Governance: Evidence from Mutual Funds’ Proxy Voting and Trading Behavior (June 24, 2014). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming; University of Alberta School of Business Research Paper No. 1894942. Available at SSRN: https://ssrn.com/abstract=1894942 or http://dx.doi.org/10.2139/ssrn.1894942
By Alex Edmans