We show that corporate governance practices vary predictably across different types of blockholders. Nonfinancial blockholders are six times as likely to self-identify as active shareholders relative to financial blockholders.
Textual analysis of regulatory filings reveals that nonfinancial blocks tend to govern through tailored actions, while financial blocks govern through generic performance-based measures. The market responds positively when nonfinancial blocks enter small, volatile, and illiquid firms where close monitoring is likely to be valuable. Finally, we find that prior studies using the Russell index inclusion discontinuity may falsely attribute governance practices to institutional ownership and may instead capture nonfinancial blockholder governance.
We analyze the impact of a large shareholder disclosing its voting decisions prior to shareholder meetings on final vote outcomes for management and...
The rapid growth in index funds and significant consolidation in the asset-management industry over the past few decades has led to higher levels of...