Events

Professor Davidson Heath
Associate Professor of Finance
David Eccles School of Business
The University of Utah

Do firm managers listen to some shareholders more than others? We show that directors facing dissent are twice as likely to exit the board when the dissent comes from active funds compared to passive funds. This reaction is driven by the stronger disciplinary threat posed by active funds rather than their informational advantage. Despite the large holdings of the “Big Three” passive asset managers, we find that their votes carry no more weight than those of the average active fund. Our findings show that shareholder influence depends not only on the vote tally, but also on who casts the votes.