Walk the talk: ESG mutual fund voting on shareholder proposals

Nonbinding Voting for Shareholder Proposals

Shareholder proposals are a common form of shareholder activism. Voting for shareholder proposals, however, is nonbinding since management has the authority to reject the proposal even if it received majority support from shareholders. We analyze whether nonbinding voting is an effective mechanism for conveying shareholder expectations. We show that, unlike binding voting, nonbinding voting gen...

Internet Appendix for "Nonbinding Voting for Shareholder Proposals"

Proof of Lemma A.1: The shareholder’s bene…t from voting for the proposal depends on his beliefs about the state of the world. Since !g > !b, other shareholders’ votes are informative about their signals and could be used to update the shareholder’s beliefs. However, when voting, the shareholder does not observe the votes of other shareholders and therefore has to consider N possible situations...

Heterogeneity and peer effects in mutual fund proxy voting

This paper studies voting in corporate director elections. We construct a comprehensive data set of 2,058,788 mutual fund votes over a two-year period. We find systematic heterogeneity in voting: some funds are consistently more management-friendly than others. We also establish the presence of peer effects: a fund is more likely to oppose management when other funds are more likely to oppose i...

The MUTUAL FUND INDUSTRY

ESG-persistence in Socially Responsible Mutual Funds

This paper analyzes the persistence of environmental, social, and governance (ESG)-scores in socially responsible (SR) mutual funds. ESG-scores can be used as a measure for the level of social responsibility of an SR mutual fund. It is shown that ESG-scores persist for approximately two years. However, the persistence of the ESG-scores is terminated after approximately three years. This implies...