Article2012

Do Pension-Related Business Ties Influence Mutual Fund Proxy Voting? Evidence from Shareholder Proposals on Executive Compensation

Rasha Ashraf · Narayanan Jayaraman B · Harley E. Ryan

118 citations0/0 files storedJournal of Financial and Quantitative Analysis

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Corporate Finance and Governance Financial Markets and Investment Strategies Political Influence and Corporate Strategies

Abstract

Abstract We examine the relation between mutual fund votes on shareholder executive compensation proposals and pension-related business ties between fund families and the firms. In unconditional tests, we find that fund families support management when they have pension ties to the firm. We find no relation when we stratify by fund family in conditional tests, which suggests that fund families with pension ties vote with management at both client and nonclient firms. We confirm this result in an analysis of nonclient firms. Overall, our results suggest that pension-related business ties influence fund families to vote with management at all firms.

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References

1973The Pricing of Options and Corporate Liabilities 1986Large Shareholders and Corporate Control 1992The investment opportunity set and corporate financing, dividend, and compensation policies 1995Executive compensation structure, ownership, and firm performance 2000Corporate governance proposals and shareholder activism: the role of institutional investors 1988Ownership structure and voting on antitakeover amendments 1993The hidden costs of stock market liquidity 2003Voting with their feet: institutional ownership changes around forced CEO turnover

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