Supply-Chain Common Ownership and Mutual Fund Proxy Voting: Evidence from Shareholder-sponsored Proposals on Antitakeover Provisions

Abstract

Mutual funds with common holdings in suppliers and their large public customers are more likely to oppose shareholder-sponsored proposals aimed at removing suppliers' antitakeover provisions (ATPs). This effect is stronger when common ownership is higher, customer supplier relationships are more critical, and proposals are contested. We establish causality using financial institution mergers as a quasi-natural experiment. Aggregate supply-chain common ownership negatively predicts proposal passage and weakens corporate governance post-voting. Funds with higher common ownership experience greater value loss if proposals pass. These results suggest that supply-chain relationship bonding is a key motivation for supply-chain common owners voting against ATP-removal proposals.

Keywords: Corporate governance, Common ownership, Antitakeover provisions (ATPs), Supply chain, Mutual fund, Proxy voting, Financial institution mergers JEL classification: G23