Do Index Funds Monitor?

Do Index Funds Monitor?

Davidson Heath, Daniele Macciocchi, Roni Michaely, Matthew C. Ringgenberg

Series number :

Serial Number: 

Date posted :

November 20 2019

Last revised :

November 20 2019
SSRN Share


  • governance • 
  • index investing • 
  • monitoring • 
  • passive investing • 
  • voting • 
  • exit

Passively managed index funds now hold over 25% of U.S. mutual fund and ETF assets. The rise of index investing raises fundamental questions about monitoring and corporate governance.

We examine the voice and exit mechanisms and find that compared to active funds, index funds rarely vote against firm management on contentious corporate governance issues, and do not use exit to express dissatisfaction with firm management. Moreover, across a variety of tests, we find no evidence that index funds engage with firm management. Our results suggest that the rise of index investing is shifting control from investors to firm managers.


Real name:
Matthew C. Ringgenberg
Real name:
Davidson Heath
Real name:
Daniele Macciocchi
Real name:
Roni Michaely
University of Geneva - Geneva Finance Research Institute (GFRI)