Influential Institutional Investors

Abstract

Using mutual funds' voting behaviors and outcomes in close votes and contentious proposals, I identify influential mutual funds and examine their determinants and effects on portfolio firms. Influential mutual funds are funds that seem to make independent voting decisions and are effective in swaying other investors to obtain desired outcomes. I find that mutual funds' private information and communication abilities are key determinants of investor influence. My results are consistent with influential mutual funds being effective monitors and implicitly acting as delegated monitors. Overall, my findings suggest influence from other investors as another important factor in institutional investors’ voting behavior.