Key Finding
Within large holdings, institutional managers (IMs) are 8 - 10 pct points more likely than mutual funds to vote against management
Abstract
Shareholder voting is optional for institutional managers (IMs), a category that includes activists, hedge funds, private wealth, and mixed asset management. Only 44% of IMs vote on firms' say-on-pay policies. However, their impact is large: the dollar value of their shares voted is twice that of mutual funds. Results suggest they use voting as a monitoring tool: among larger positions, where the benefits of monitoring are greater, they are both more likely to vote and more likely to vote against management. Yet, there is substantial heterogeneity across IMs, with some using voting to pursue other objectives, such as signaling friendliness toward management. We find that smaller firms attract fewer IM votes overall, but among shares voted, there is a more anti-management stance.
