Heterogeneity and peer effects in mutual fund proxy voting

Gregor Matvos*, Michael Ostrovsky

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

44 Scopus citations

Abstract

This paper studies voting in corporate director elections. We construct a comprehensive data set of 2,058,788 mutual fund votes over a two-year period. We find systematic heterogeneity in voting: some funds are consistently more management-friendly than others. We also establish the presence of peer effects: a fund is more likely to oppose management when other funds are more likely to oppose it, all else being equal. We estimate a voting model whose supermodular structure allows us to compute social multipliers due to peer effects. Heterogeneity and peer effects are as important in shaping voting outcomes as firm and director characteristics.

Original languageEnglish (US)
Pages (from-to)90-112
Number of pages23
JournalJournal of Financial Economics
Volume98
Issue number1
DOIs
StatePublished - Oct 1 2010

Keywords

  • Boards of directors
  • Director elections
  • Peer effects and strategic complementarities
  • Proxy voting
  • Supermodular games

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management

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