Citations (2)



Are Mutual Funds Active Voters?

Peter Iliev

Pennsylvania State University - Department of Finance

Michelle Lowry

Drexel University

April 15, 2014

Review of Financial Studies, 2015

Mutual funds vary greatly in their reliance on proxy advisory recommendations. Over 25% of funds rely almost entirely on ISS recommendations, while other funds place little weight on them. Funds with higher benefits and lower costs of researching items up for vote are less likely to rely on ISS. These actively voting funds are less likely vote in a 'one size fits all' manner and they earn higher alphas, consistent with benefits from this allocation of resources. For the underlying firms, the presence of actively voting funds mitigates the influence of ISS and helps sway shareholder votes toward value-maximizing outcomes.

Number of Pages in PDF File: 64

Keywords: Shareholder voting, agency costs, monitors, mutual funds

JEL Classification: G30

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Date posted: September 13, 2012 ; Last revised: April 9, 2015

Suggested Citation

Iliev, Peter and Lowry, Michelle, Are Mutual Funds Active Voters? (April 15, 2014). Review of Financial Studies, 2015. Available at SSRN: https://ssrn.com/abstract=2145398 or http://dx.doi.org/10.2139/ssrn.2145398

Contact Information

Peter Iliev
Pennsylvania State University - Department of Finance ( email )
348 Business Building
University Park, PA 16802
United States
Michelle B. Lowry (Contact Author)
Drexel University ( email )
Philadelphia, PA 19104
United States
215-895-6070 (Phone)
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