City Research Online

Abstract

Using data on the universe of US-based mutual funds, we find that two out of five fund families hold corporate bonds of firms in which they also own an equity stake. We show that the greater the fraction of debt a fund family holds in a given firm, the greater its propensity to vote in line with the interests of firm debt holders at shareholder meetings, even when against ISS recommendation. Voting has direct policy consequences as firms that receive more votes in favor of creditors make corporate decisions more in line with the interests of debt holders.

Publication Type:	Monograph (Working Paper)
Additional Information:	Final publication in Journal of Financial and Quantitative Analysis, https://doi.org/10.1017/S0022109020000630.
Subjects:	H Social Sciences > HG Finance H Social Sciences > HJ Public Finance
Departments:	Bayes Business School > Finance

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