Law and Economics Colloquium
Presents:
Alon Brav
Duke, Fuqua School of Business
Picking Friends Before Picking (Proxy) Fights: How Mutual Fund Voting Shapes Proxy Contests
Tuesday October 26, 2021
4:10pm – 5:45pm
ZOOM Meeting
https://zoom.us/j/99730854871
Abstract: This paper provides the first comprehensive study of mutual fund voting in proxy contests. Funds tend to vote against incumbent management at firms with weak operating and financial performance, and in favor of dissidents with credible track records. Passive funds are active monitors although they are more supportive of incumbent management than active funds. We document a positive selec[1]tion effect: dissidents are more likely to initiate contests and proceed to voting when shareholders are expected to be more supportive based on observable and unobservable event characteristics as well as inherent pro-activist investor stance. Overall, institutional investors play a pivotal role in shaping the initiation and outcomes of proxy contests
Alon Brav is Professor of Finance at the Fuqua School of Business, Duke University. Professor Brav obtained his Ph.D. in Finance from the University of Chicago Booth School of Business. He joined the Fuqua Faculty in 1997. His current research focuses on hedge fund activism. This research has been featured in the Journal of Finance, Journal of Financial Economics and Columbia Law Review. Professor Brav has also studied the debate between rational and behavioral finance and the literature on limits to arbitrage activities. This research has been featured in the Review of Financial Studies, Review of Finance and Journal of Economic Methodology.
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