US index funds vote against management at investee companies less frequently than their actively managed counterparts when it comes to shareholder proposals on contentious issues such as executive pay, research has found. The difference suggests passive managers are not as likely to hold companies to account, say academics at Utah and Geneva universities. When it came to contentious proposals at annual meetings — defined as those in which proxy adviser Institutional Shareholder Services recommended voting against the preference of the company — index funds sided with management 55.5 per cent of the time compared with 46.2 per cent for their active counterparts. Index funds “potentially challenge the way corporate governance occurs”, said Matthew Ringgenberg, associate professor of finance at Utah and one of the study authors. Read Full Article - Financial Times, July 15, 2019