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Do Pension-Related Business Ties Influence Mutual Fund Proxy Voting? Evidence from Shareholder Proposals on Executive Compensation

Published online by Cambridge University Press:  05 January 2012

Rasha Ashraf
Affiliation:
rashraf@gsu.edu
Narayanan Jayaraman
Affiliation:
Robinson College of Business, Georgia State University, 35 Broad St., Atlanta, GA 30303cryan@gsu.edu
Harley E. Ryan Jr.
Affiliation:
Scheller College of Business, Georgia Institute of Technology, 800 W Peachtree St. NW, Atlanta, GA 30308. narayanan.jayaraman@mgt.gatech.edu

Abstract

We examine the relation between mutual fund votes on shareholder executive compensation proposals and pension-related business ties between fund families and the firms. In unconditional tests, we find that fund families support management when they have pension ties to the firm. We find no relation when we stratify by fund family in conditional tests, which suggests that fund families with pension ties vote with management at both client and nonclient firms. We confirm this result in an analysis of nonclient firms. Overall, our results suggest that pension-related business ties influence fund families to vote with management at all firms.

Type
Research Articles
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2012

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