Phantom of the Opera: ETF Shorting and Shareholder Voting

Phantom of the Opera: ETF Shorting and Shareholder Voting

Richard B. Evans, Oğuzhan Karakaş, Rabih Moussawi, Michael Young

Series number :

Serial Number: 

Date posted :

May 30 2021

Last revised :

May 30 2021
SSRN Share


  • Exchange-Traded Funds • 
  • proxy voting • 
  • voting premium • 
  • Short Interest • 
  • Operational Shorting • 
  • Authorized Participants • 
  • collateral • 
  • Broke

The short-selling of exchange-traded funds (ETFs) creates “phantom” ETF shares, trading at ETF market prices, with cash flows rights but no associated voting rights. Unlike regular ETF shares backed by the ETF’s underlying securities which are voted as directed by the ETF sponsor, phantom ETF shares are backed by collateral that is not voted.

Introducing a novel measure of phantom ETF shares for the corresponding underlying securities, we find that increases in phantom shares are associated with decreases in number of proxy votes cast (for and against), and increases in broker non-votes, the voting premium, and value-reducing acquisitions.


Real name:
Richard B. Evans
Real name:
Rabih Moussawi
Real name:
Michael Young