Active Mutual Fund Common Owners’ Returns and Proxy Voting Behavior

61 Pages Posted: 12 Aug 2022 Last revised: 3 Feb 2023

See all articles by Ben Charoenwong

Ben Charoenwong

National University of Singapore - Department of Finance

Zhenghui Ni

National University of Singapore (NUS) - Department of Finance

Qiaozhi Ye

National University of Singapore

Date Written: August 8, 2022

Abstract

We find that active mutual funds owning product market competitors have superior risk-adjusted returns that are not driven by industry concentration, common selection, or stock picking ability. These funds charge higher fees but also generate persistent net-of-fee returns for investors. Funds with higher common ownership are more active voters who are more likely to vote against executive incentives compensation and for directors with existing directorships in competitors. Our findings suggest some actively-managed mutual funds have an incentive to soften product market competition and that proxy voting could serve as one mechanism for influencing corporate policy.

Keywords: common ownership, mutual fund, performance evaluation, shareholder control, corporate governance

JEL Classification: G11, G14, G23, G32, G34, D43

Suggested Citation

Charoenwong, Ben and Ni, Zhenghui and Ye, Qiaozhi, Active Mutual Fund Common Owners’ Returns and Proxy Voting Behavior (August 8, 2022). Available at SSRN: https://ssrn.com/abstract=4184584 or http://dx.doi.org/10.2139/ssrn.4184584

Ben Charoenwong

National University of Singapore - Department of Finance ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

HOME PAGE: http://bizfaculty.nus.edu/faculty-profiles/519-ben

Zhenghui Ni (Contact Author)

National University of Singapore (NUS) - Department of Finance ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

Qiaozhi Ye

National University of Singapore ( email )

1 Business Link
Singapore
Singapore, 117592

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