Do Passive Investors Impact Corporate Governance?

The trend towards passive investing, and the decline of the active manager, has raised concerns that firms’ corporate governance could start to slip, as passive investors are less inclined to raise governance concerns than their active peers. Corporate governance: Passive Investors, Not Passive Owners Passive Investors, Not Passive Owners, a study by Ian R. Appel, Todd A. Gormley, and Donald B. Keim examined whether passive institutional investors, like Vanguard and Dimensional Fund Advisors do influence firms and if they care about firm-specific policies or governance choices. Excluding this study, there seems to be a lack of research on passive institutional investors,…