Voting Choice

Department: Finance

Speaker: Andrey Malenko (Boston College)

Room: TBD

Abstract

Traditionally, fund managers cast votes on behalf of fund investors. Recently, there is a shift towards, pass-through voting,. with fund managers o¤ering their investors a choice: delegate their votes to the fund or vote themselves. We develop a theory of delegation of voting rights to study the implications of such voting choice. If investors have heterogeneous preferences, voting choice may decrease investor welfare because in-vestors retain voting rights excessively, prioritizing their preferences over information. If investors have heterogeneous information, voting choice generally improves investor wel-fare. However, it may decrease fund managers.information collection e¤ort, resulting in less informed voting outcomes.