Dasgupta, Amil 
ORCID: 0000-0001-8474-9470 and Zachariadis, Konstantinos
(2011)
Delegated activism and disclosure.
Financial Markets Group Discussion Papers (689).
Financial Markets Group, The London School of Economics and Political Science, London, UK.
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Abstract
Mutual funds hold large blocks of shares in many major corporations. Practitioners and regulators alike have been concerned that mutual funds use their proxy votes in a promanagement manner in order to garner lucrative pensions administration contracts, thus hindering shareholder value. Such concerns led the SEC to mandate the disclosure of mutual fund proxy votes starting in 2003. We present a simple model of mutual fund proxy voting in the presence of potential business ties. Our model generates clean predictions on how funds would vote both prior and subsequent to mandatory disclosure. We provide theoretical foundation for the limited activism of mutual funds and demonstrate that mandatory disclosure is not a panacea. We also show that the strategic interaction between multiple mutual fund blockholders of comparable size can generate counterintuitive non-monotone relationships with relevant empirical implications.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Official URL: | https://www.fmg.ac.uk/ |
| Additional Information: | © 2011 The Authors |
| Divisions: | Finance Financial Markets Group |
| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HG Finance |
| JEL classification: | G - Financial Economics > G0 - General > G00 - General |
| Date Deposited: | 16 Apr 2012 08:59 |
| Last Modified: | 15 Sep 2023 23:24 |
| URI: | http://eprints.lse.ac.uk/id/eprint/43078 |
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