VGSF - WU Vienna - LC

Matt Ringgenberg, University of Utah

Campus WU D3.0.225 11:00 - 12:30

Organizer VGSF

As part of the ser­ies of the "Fin­ance Re­search Sem­inar", VGSF wel­comes Matt Ring­gen­berg from the Uni­versity of Utah to present his re­search pa­per.
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Do In­dex Funds Mon­itor?

We ex­am­ine whether pass­ively man­aged in­dex funds mon­itor their port­fo­lio com­pan­ies us­ing a new re­search design that gen­er­ates exo­gen­ous vari­ation in fund hold­ings. We find in­dex funds are weak mon­it­ors. Un­like act­ive funds, in­dex funds: (i) usu­ally vote with firm man­age­ment; (ii) do not use exit to en­force good gov­ernance, al­though they do sell 16% of hold­ings each year; (iii) rarely file a Sched­ule 13D, in­dic­at­ing they do not in­tend to af­fect firm policies. Moreover, the agenda items that in­dex funds sup­port re­duce firm value. Our res­ults show that in­dex in­vest­ing hurts share­hold­ers by shift­ing con­trol from in­vestors to man­agers.

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