Alon Brav, Professor of Finance at the Fuqua School of Business, Duke University

We study retail shareholder voting using a detailed and nearly universal sample of anonymised retail shareholder voting records over the period 2015-2017. Contrary to public perception, we find that retail shareholders are an influential voting bloc, affecting as many proposal outcomes as the Big Three asset management firms despite lower voting participation and less uniform voting. Consistent with a monitoring role, retail voters are more likely to turn out for the securities in their portfolio that have underperformed, for ballots that include contested proposals, and for firms comprising the largest stakes in their portfolio. Retail shareholders with large stock portfolios and low opportunity costs are most likely to turn out. In regards to retail voting decisions, we find high sensitivity to recent poor performance, but far lower sensitivity to ISS recommendations than that of large mutual funds. Retail shareholders can be divided into two blocs. The first are highly influential large stakeholders, who turn out at high rates and strongly oppose shareholder proposals. The second are the more populous small stakeholders, who turn out at lower rates and show higher support for shareholder proposals. Retail shareholders are more influential at smaller firms, where they hold a larger proportionate share, their turnout is higher, and their support for management is lower. Our evidence provides support for the idea that retail shareholders can and do utilise their voting power as a means to monitor firms and communicate with incumbent boards and managements.

Speaker bio

Alon Brav is Professor of Finance at the Fuqua School of Business, Duke University. Professor Brav obtained his PhD in Finance from the University of Chicago Booth School of Business. He joined the Fuqua Faculty in 1997.

Professor Brav’s current research focuses on corporate governance, shareholder voting, and hedge fund activism. This research has been featured in the Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Financial Analysts Journal, and Columbia Law Review. Professor Brav has also studied the debate between rational and behavioural finance and the literature on limits to arbitrage activities. This research has been featured in the Review of Financial Studies, Review of Finance and Journal of Economic Methodology.

Professor Brav was awarded the 1998 Smith Breeden Distinguished Paper Prize at the Journal of Finance with Paul Gompers, the 2003 Barclays Global Investors Michael Brennan Award for the best paper at the Review of Financial Studies with J.B. Heaton, the 2005 Jensen Prize for the best corporate finance paper published in the Journal of Financial Economics with John Graham, Campbell Harvey and Roni Michaely, the 2016 Barclays Global Investors Michael Brennan Award for the best paper published at the Review of Financial Studies with Wei Jiang and Hyunseob Kim, and the 2018 Jensen Prize for the best corporate finance and organisations paper published in the Journal of Financial Economics with Wei Jiang, Song Ma, and Xuan Tian.

Professor Brav is faculty research associate at the National Bureau of Economic Research (NBER), Corporate Finance Program. He is an associate editor at the Journal of Finance, Research member European Corporate Governance Institute (ECGI), and senior Fellow at the Harvard Law School Program on Corporate Governance.

Professor Brav currently teaches Corporate Restructuring in the Daytime MBA program and Global Capital Markets in the Weekend Executive MBA program and has taught the core Global Financial Management and an Investments elective.

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Date: 16 March 2021
Start Time: 13:00
End Time: 14:00

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Open to: Members of the University of Cambridge

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(where applicable, further details sent upon registration)

Event timings

Date: 16 March 2021
Start Time: 13:00
End Time: 14:00