Publication Type
Working Paper
Version
submittedVersion
Publication Date
12-2019
Abstract
We examine the implications of stock ownership by index funds for shareholder value. Consistent with recent findings that stock ownership by passive funds contributes to improved governance, we document a strong positive relation between the duration of passive fund holdings and subsequent stock performance. This positive relation is more pronounced for firms with recent poor performance, and for smaller firms and firms with higher allocation weights in passive funds’ portfolios. Our results support the view that index funds, although passive in their investment decisions, successfully contribute to long-term value creation by actively engaging with firms on matters of governance.
Discipline
Finance | Finance and Financial Management
Research Areas
Finance
First Page
1
Last Page
55
Citation
BOEHMER, Ekkehart; SONG, Wanshan; TIWARI, Ashish; and ZHANG, Zhe.
Long-term index fund ownership and stock returns. (2019). 1-55.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/6214
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.