Delegated Activism and Disclosure

Amil Dasgupta and Konstantinos Zachariadis

No 8587, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Mutual funds are signi ficant blockholders in many corporations. Concerns that funds vote in a pro-management manner to garner lucrative pensions contracts led the SEC to mandate the disclosure of proxy votes. We present a model of mutual fund voting in the presence of potential business ties. We characterize the limits of delegated activism by mutual funds pre- and post-disclosure and show that disclosure is not a panacea: for some proposals disclosure hurts activism. The desirability of disclosure also depends on the distribution of business ties amongst mutual funds. We provide support for existing empirical findings and generate new testable implications.

Keywords: Corporate governance; Activist investors; Mutual funds; Delegated portfolio management (search for similar items in EconPapers)
JEL-codes: G0 G3 (search for similar items in EconPapers)
Date: 2011-10
New Economics Papers: this item is included in nep-cdm
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Working Paper: Delegated activism and disclosure (2011)
Working Paper: Delegated Activism and Disclosure (2011)
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