Journal ArticleDOI
Picking Friends Before Picking (Proxy) Fights: How Mutual Fund Voting Shapes Proxy Contests
TLDR
In this article, the authors provide the first comprehensive study of mutual fund voting in proxy contests, finding that shareholders tend to vote against incumbent management at firms with weak operating and financial performance, and in favor of dissidents with credible track records.Abstract:
This paper provides the first comprehensive study of mutual fund voting in proxy contests. Funds tend to vote against incumbent management at firms with weak operating and financial performance, and in favor of dissidents with credible track records. Passive funds are active monitors although they are more supportive of incumbent management than active funds. We document a positive selection effect: dissidents are more likely to initiate contests and proceed to voting when shareholders are expected to be more supportive based on observable and unobservable event characteristics as well as inherent pro-activist investor stance. Overall, institutional investors play a pivotal role in shaping the initiation and outcomes of proxy contests.read more
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Journal ArticleDOI
Carbon Tail Risk
TL;DR: In this article, the authors show that climate policy uncertainty makes it difficult for investors to quantify the impact of future climate regulation, and they show that such uncertainty is priced in the option market and that the cost of option protection against downside tail risks is larger for firms with more carbon-intense business models.
Journal ArticleDOI
Carbon Tail Risk
TL;DR: In this article, the authors show that climate policy uncertainty makes it difficult for investors to quantify the impact of future climate regulation, and they show that such uncertainty is priced in the option market and that the cost of option protection against downside tail risks is larger for firms with more carbon-intense business models.
Journal ArticleDOI
Common-Ownership Concentration and Corporate Conduct
TL;DR: The question of whether and how partial common-ownership links between strategically interacting firms affect firm objectives and behavior has been the subject of theoretical inquiry for decades as mentioned in this paper. But it has not been studied in practice.
Journal ArticleDOI
The Illusory Promise of Stakeholder Governance
TL;DR: Bebchuk et al. as discussed by the authors conducted a conceptual, economic, and empirical analysis of stakeholderism and its expected consequences, and concluded that, because corporate leaders have strong incentives not to protect stakeholders beyond what would serve shareholder value, acceptance of Stakeholderism should not be expected to produce material benefits for stakeholders.
ReportDOI
Index Funds and the Future of Corporate Governance: Theory, Evidence, and Policy
TL;DR: In this article, an agency-costs analysis of index fund managers is presented, showing that index managers have strong incentives to underinvest in stewardship and defer excessively to the preferences and positions of corporate managers.
References
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Journal ArticleDOI
The demand for deductibles in private health insurance: A probit model with sample selection
TL;DR: The results give an indication of the degree of adverse selection that may take place if health insurance policies are offered with the option to take a deductible in exchange of a premium reduction.
Journal ArticleDOI
Hedge Fund Activism, Corporate Governance, and Firm Performance
TL;DR: In this article, the authors used a large hand-collected dataset from 2001 to 2006 to find that hedge funds in the U.S. propose strategic, operational, and financial remedies and attain success or partial success in two thirds of the cases.
Posted Content
Blockholder Trading, Market Efficiency, and Managerial Myopia
Alex Edmans,Alex Edmans +1 more
TL;DR: The authors analyzes how blockholders can exert governance even if they cannot intervene in a firm's operations and shows that they can encourage investment by impounding its effects into prices, which encourages managers to invest for long run growth rather than short-term profits.