On the Road to Better Governance: Private Meetings and Mutual Fund Voting

64 Pages Posted: 1 Feb 2022 Last revised: 17 Aug 2022

See all articles by Jesse A. Ellis

Jesse A. Ellis

North Carolina State University

William Christopher Gerken

University of Kentucky - Finance

Russell Jame

University of Kentucky - Gatton College of Business and Economics

Date Written: November 18, 2021

Abstract

We study whether private interactions between firms and mutual funds during non-deal roadshows (NDRs) influence governance behavior. Funds headquartered in the city where the firm conducts an NDR are more likely to download proxy statements. They are also more likely to vote with management on contentious proposals, and their voting is perceived by the market as value increasing, particularly when ISS issues "one-size-fits-all" recommendations. Further, high aggregate NDR ownership is associated with a smaller proportion of contentious proposals where management issues value-destroying recommendations. Collectively, the evidence is consistent with "behind-the-scenes" engagement between firms and investors resulting in improved governance outcomes.

Keywords: Mutual fund voting, private meetings, non-deal roadshows, corporate governance, ISS

Suggested Citation

Ellis, Jesse A. and Gerken, William Christopher and Jame, Russell, On the Road to Better Governance: Private Meetings and Mutual Fund Voting (November 18, 2021). Available at SSRN: https://ssrn.com/abstract=3966579 or http://dx.doi.org/10.2139/ssrn.3966579

Jesse A. Ellis

North Carolina State University ( email )

Poole College of Management
Campus Box 7229
Raleigh, NC 27695
United States
919-515-9670 (Phone)

William Christopher Gerken (Contact Author)

University of Kentucky - Finance ( email )

College of Business & Economics
Lexington, KY 40506-0034
United States

HOME PAGE: http://www.willgerken.com

Russell Jame

University of Kentucky - Gatton College of Business and Economics ( email )

550 South Limestone
Lexington, KY 40506
United States

HOME PAGE: http://russelljame.com

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