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Does disclosure regulation affect mutual fund families’ proxy voting?

Author
Kim, Eunjee
Abstract
This paper examines the effect of disclosure regulation on mutual fund families’ proxy voting. I study beneficial ownership reporting rules requiring more-than-5% equity investors to file either a 13D, which allows them to influence the firm and its management, or a less costly 13G, which prohibits such actions. Using a regression discontinuity design, I find that mutual fund families that file beneficial ownership reports (i.e., just above 5%) are more likely to vote in favor of management on executive compensation than families that do not (i.e., just below 5%). Consistent with the idea that mutual fund families opt for a low-cost 13G at the expense of their ability to influence the firm, I also document that the effect of the reporting rules is greater when the cost of filing a 13D is higher or when voting against management is more likely to be seen as influencing the firm. My findings suggest that the regulatory mandates aimed at improving transparency can incentivize mutual fund families to refrain from confronting management in voting.
Description
77 pages
Date Issued
2021-05Subject
Blockholders; Disclosure costs; Executive compensation; Mutual funds; Proxy voting; Schedules 13D and 13G
Committee Chair
Bhojraj, Sanjeev
Committee Member
Bloomfield, Robert J.; Corum, Adrian Aycan; Sethuraman, Mani
Degree Discipline
Management
Degree Name
Ph. D., Management
Degree Level
Doctor of Philosophy
Type
dissertation or thesis