Are mutual funds active voters?

Peter G. Iliev, Michelle Lowry

Research output: Contribution to journalArticle

29 Citations (Scopus)

Abstract

Mutual funds vary greatly in their reliance on proxy advisory recommendations. Over 25% of funds rely almost entirely on Institutional Shareholder Services (ISS) recommendations, while other funds place little weight on them. Funds with higher benefits and lower costs of researching the items up for vote are less likely to rely on ISS. These actively voting funds are less likely to 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.

Original languageEnglish (US)
Pages (from-to)446-485
Number of pages40
JournalReview of Financial Studies
Volume28
Issue number2
DOIs
StatePublished - Feb 1 2015

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Voters
Mutual funds
Institutional shareholders
Vote
Voting
Resources
Costs
Shareholders

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

Iliev, Peter G. ; Lowry, Michelle. / Are mutual funds active voters?. In: Review of Financial Studies. 2015 ; Vol. 28, No. 2. pp. 446-485.
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Are mutual funds active voters? / Iliev, Peter G.; Lowry, Michelle.

In: Review of Financial Studies, Vol. 28, No. 2, 01.02.2015, p. 446-485.

Research output: Contribution to journalArticle

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