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Brown Bag Seminars

Do Registered Funds undermine shareholder activism? Evidence from Hedge Fund proposals

Guest speaker

César Mendonça (U. Minho - NIPE)


Campus de Gualtar | EEG - Room -1.26


Start17.11.2021 11:00End17.11.2021 12:00

Event summary


In this paper we examine Registered Investment Funds (Mutual Funds, ETFs and Close-end Funds) behavior on voting shareholder proposals, with a focus on proposals submitted by Hedge Funds, which have been shown in the literature to contribute to firm value through their activist campaigns. Registered Funds are the largest class of institutional investors in equity in the U.S. market; their equity holdings play a pivotal role in disputes between management and dissident investors. We compare the support rates of Registered Funds versus other types of investors about the proposals set up for voting at shareholders meetings and propose a set of fund-level characteristics that may explain the variation in support rates. Our results show that the average support rate by Registered Fund is 34% whereas overall support rate to Hedge Fund proposals is 41%. We do find an increased support for Hedge Fund proposals when the voting fund has higher incentives to benefit from an appreciation in targeted companies’ value. However, the support rates are much lower when the Registered Fund has business ties with the firm.  Our results reinforce concerns related to the growing ownership in public companies by passively managed Registered Funds and their influence on voting outcomes in management and shareholder proposals.

This Wednesday, 17th November, at 1:00, in person in the room -1.26 EEG and Online.

To join the webinar, click on the link: https://videoconf-colibri.zoom.us/j/85920335008

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Looking forward to your attendance.