How do passive funds act as active owners? Evidence from mutual fund voting records

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review

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Original languageEnglish
Article number101692
Number of pages16
Journal / PublicationJournal of Corporate Finance
Online published12 Jul 2020
Publication statusPublished - Feb 2021


The rise of passive institutional investors in the U.S. stock market raises questions about the governance implications to their portfolio firms. While the existing literature documents positive governance changes when passive institutional ownership displaces retail ownership, it remains unclear how passive institutional ownership approaches corporate governance differently than their active peers. This paper compares the proxy voting behaviors between same-family passive and active mutual funds with identical investment styles. We find that passive funds are not more likely to vote in favor of governance reforms than active funds. We also provide suggestive evidence that besides voting, the influence of passive funds on corporate governance also operates through a “behind the scenes” channel.

Research Area(s)

  • Corporate governance, Mutual funds, Proxy voting

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Research Unit(s) information for this publication is provided by the author(s) concerned.