Appel, Gormley, and Keim (2015)
Appel, Ian R., Todd A. Gormley, and Donald B. Keim. “Passive Investors, Not Passive Owners.” Working paper (Boston College), 2015.
From the authors' abstract: "Our findings suggest that passive investors play a key role in influencing firms’ governance choices; ownership by passively managed funds is associated with more independent directors, the removal of takeover defenses, and more equal voting rights. Passive investors appear to exert influence through their large voting blocs, and consistent with the observed differences in governance having a positive influence on firm value and reducing the need for activism by other investors, we document a decline in activism by non-passive investors and improvements in firms’ longer-term performance."
LK comment: Strong paper, won the 2015 IRRC Institute Research Award for academic research