DP16337 The Benefits of Access: Evidence from Private Meetings with Portfolio Firms

Author(s): Marco Becht, Julian R Franks, Hannes Wagner
Publication Date: July 2021
Keyword(s): active investors, Active ownership, Analysts, corporate governance, Fund managers, institutional investors, shareholder voting, stewardship, Trading
JEL(s): G11, G14, G23, G34
Programme Areas: Financial Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16337

We analyze the monitoring efforts of a large active asset manager that involve high-level private meetings with portfolio firms that are unobservable to outsiders. Our analysis reveals the inner workings of the asset management organization based on detailed records of contacts with executives and board members of portfolio firms, internal analyst recommendations, voting decisions, and daily fund-level stock holdings. Private meetings generate pronounced trading patterns, with fund managers trading on and around meeting days and votes. Our results show that engagement with target firms generates insights and information advantages, increases trading and is associated with significant abnormal returns.