How do active managers engage with portfolio firms? And, what role does monitoring and engagement play in their trading decisions? We use proprietary data from a large UK active asset manager with a long-standing commitment to stewardship to...Read more
In November 2012, Norway’s sovereign wealth fund (NBIM) unexpectedly announced that it would foster better corporate governance practices in its portfolio firms by articulating specific governance expectations. We use this sudden change in...Read more
This paper analyzes the conduct of mutual funds in shareholder litigation. We begin by reviewing the basic forms of shareholder litigation and the benefits such claims might offer mutual fund investors. We then investigate, through an in-depth...Read more
This article offers a theory of mutual fund voting to answer when mutual funds should vote on behalf of their investors and when they should not. It argues that voting authority for mutual funds ought to depend upon: (1) whether the fund...Read more
Index funds own an increasingly large proportion of American public companies. The stewardship decisions of index fund managers—how they monitor, vote, and engage with their portfolio companies—can be expected to have a profound impact on the...Read more
A widely accepted principle in finance is that good corporate governance is associated with higher firm value. However, what is “good governance” and whether the same set of good governance practices can be universally adopted are fiercely...Read more
Institutional investors are becoming increasingly influential on firm policies. The rise in intermediated investment, coupled with growing...Read more
Mutual funds own approximately 30 percent of the U.S. equity market, and the Big Three fund families – Blackrock, Vanguard, and State Street – are...Read more
Corporate ownership around the world rests largely in the hands of institutional intermediaries. Even in U.S., once a bastion of retail investors...Read more
Policymakers and investors around the world have been increasingly emphasizing the importance of effective corporate governance systems. Corporate...Read more
Prof. Pedro Matos (Associate Professor of Business Administration, University of Virginia) presents his paper on "Are Foreign Investors Locusts? The Long-Term Effects of Foreign Institutional Ownership" at the 2016 GCGC Conference in Stockholm. Discussion of the paper is then presented by Prof. Giovanna Nicodano (Professor of Financial Economics, Università di Torino).
This paper challenges the view that foreign investors lead firms to adopt a short-term orientation and forgo long-term investment. Using a comprehensive sample of publicly listed firms in 30 countries over the 2001-2010 period, we find instead that greater foreign institutional ownership fosters long-term investment in tangible, intangible, and human capital. Foreign institutional ownership also leads to significant increases in innovation output.