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- Publisher Website: 10.1093/rfs/hhab023
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Article: Do Index Funds Monitor?
| Title | Do Index Funds Monitor? |
|---|---|
| Authors | |
| Issue Date | 2021 |
| Publisher | Oxford University Press. The Journal's web site is located at http://rfs.oxfordjournals.org/ |
| Citation | The Review of Financial Studies, 2021, Epub 2021-02-01, p. article no. hhab023 How to Cite? |
| Abstract | Passively managed index funds now hold over 30% of U.S. equity fund assets; this shift raises fundamental questions about monitoring and governance. We show that, relative to active funds, index funds are less effective monitors: (a) they are less likely to vote against firm management on contentious governance issues; (b) there is no evidence they engage effectively publicly or privately; and (c) they promote less board independence and worse pay-performance sensitivity at their portfolio companies. Overall, the rise of index funds decreases the alignment of incentives between beneficial owners and firm management and shifts control from investors to managers. |
| Persistent Identifier | http://hdl.handle.net/10722/298666 |
| ISSN | 2021 Impact Factor: 8.414 2020 SCImago Journal Rankings: 12.800 |
| ISI Accession Number ID |
| DC Field | Value | Language |
|---|---|---|
| dc.contributor.author | Heath, D | - |
| dc.contributor.author | Macciocchi, D | - |
| dc.contributor.author | Michaely, R | - |
| dc.contributor.author | Ringgenberg, MC | - |
| dc.date.accessioned | 2021-04-12T03:01:42Z | - |
| dc.date.available | 2021-04-12T03:01:42Z | - |
| dc.date.issued | 2021 | - |
| dc.identifier.citation | The Review of Financial Studies, 2021, Epub 2021-02-01, p. article no. hhab023 | - |
| dc.identifier.issn | 0893-9454 | - |
| dc.identifier.uri | http://hdl.handle.net/10722/298666 | - |
| dc.description.abstract | Passively managed index funds now hold over 30% of U.S. equity fund assets; this shift raises fundamental questions about monitoring and governance. We show that, relative to active funds, index funds are less effective monitors: (a) they are less likely to vote against firm management on contentious governance issues; (b) there is no evidence they engage effectively publicly or privately; and (c) they promote less board independence and worse pay-performance sensitivity at their portfolio companies. Overall, the rise of index funds decreases the alignment of incentives between beneficial owners and firm management and shifts control from investors to managers. | - |
| dc.language | eng | - |
| dc.publisher | Oxford University Press. The Journal's web site is located at http://rfs.oxfordjournals.org/ | - |
| dc.relation.ispartof | The Review of Financial Studies | - |
| dc.rights | Post-print: This is a pre-copy-editing, author-produced PDF of an article accepted for publication in [insert journal title] following peer review. The definitive publisher-authenticated version [insert complete citation information here] is available online at: xxxxxxx [insert URL that the author will receive upon publication here]. | - |
| dc.title | Do Index Funds Monitor? | - |
| dc.type | Article | - |
| dc.identifier.email | Michaely, R: ronim@hku.hk | - |
| dc.description.nature | link_to_subscribed_fulltext | - |
| dc.identifier.doi | 10.1093/rfs/hhab023 | - |
| dc.identifier.hkuros | 322109 | - |
| dc.identifier.volume | Epub 2021-02-01 | - |
| dc.identifier.spage | article no. hhab023 | - |
| dc.identifier.epage | article no. hhab023 | - |
| dc.identifier.isi | WOS:000736102600003 | - |
| dc.publisher.place | United Kingdom | - |