Passive Investors , Not Passive Owners *

  title={Passive Investors , Not Passive Owners *},
  author={Ian R. Appel and Todd A. Gormley and Donald B. Keim},
Passive institutional investors are an increasingly important component of U.S. stock ownership, and their influence on firm-level governance is widely debated. To examine whether and by which mechanisms passive investors influence firms’ governance structures, we use an instrumental variable estimation and exploit variation in passive institutional ownership that results from stocks being assigned to either the Russell 1000 or 2000 index. Our findings suggest that passive investors play a key… CONTINUE READING
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