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
Index funds own an increasingly large proportion of American public companies, currently more than one fifth and steadily growing. The stewardship decisions of index fund managers—how they monitor, vote, and engage with their portfolio companies—...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
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, though an in-depth...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
Policymakers and investors around the world have been increasingly emphasizing the importance of effective corporate governance systems. Corporate...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
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.