Affiliation:
1. Cardiff Business School Cardiff University Cardiff UK
2. Hull University Business School University of Hull Hull UK
Abstract
AbstractExchange Traded Funds (ETFs) have often tracked indices and charged low fees so their incentives to improve firm performance are questionable although little empirical work has investigated this issue. Theoretically, however, we expect firms to perform better when held by more engaged ETFs. We develop a new measure of engagement using a weighted‐average concentration measure which captures the combined effect of the concentration of the portfolios of the ETFs investing in a firm and the ownership of the firm by those ETFs. Using ETFs' investment in US‐listed firms for the period 2000–2019, we confirm our expectations that more engaged ETFs improve firm performance.
Subject
General Economics, Econometrics and Finance,Accounting
Reference81 articles.
1. CEO overconfidence and the value of corporate cash holdings;Aktas N.;Journal of Corporate Finance,2019
2. Exchange‐traded funds and real investment;Antoniou C.;Review of Financial Studies,2023
3. Passive investors, not passive owners;Appel I. R.;Journal of Financial Economics,2016
4. Azar J. Scmalz M. C. &Tecu I.(2017).Anticompetitive effects of common ownership (Working paper) IESE Business School–University of Navarra.
5. All that glitters: The effect of attention and news on the buying behavior of individual and institutional investors;Barber B. M.;Review of Financial Studies,2008