Engaged ETFs and firm performance

El Kalak, Izidin; Hudson, Robert; Kemal Tosun, Onur

Abstract

Exchange Traded Funds (ETFs) have often tracked indices and charged low fees so their incentives to improve firm performance are questionable although little empirical work has investigated this issue. Theoretically, however, we expect firms to perform better when held by more engaged ETFs. We develop a new measure of engagement using a weighted-average concentration measure which captures the combined effect of the concentration of the portfolios of the ETFs investing in a firm and the ownership of the firm by those ETFs. Using ETFs' investment in US-listed firms for the period 2000–2019, we confirm our expectations that more engaged ETFs improve firm performance.

Citation

El Kalak, I., Hudson, R., & Kemal Tosun, O. (2023). Engaged ETFs and firm performance. European Financial Management, https://doi.org/10.1111/eufm.12459

• Journal Article Type: Article
• Acceptance Date: Jun 1, 2023
• Online Publication Date: Sep 26, 2023
• Publication Date: Jan 1, 2023
• Deposit Date: Sep 14, 2023
• Publicly Available Date: Sep 26, 2023
• Journal: European Financial Management
• Print ISSN: 1354-7798
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• DOI: https://doi.org/10.1111/eufm.12459
• Keywords: Corporate governance; Exchange Traded Funds (ETFs); Firm performance; Monitoring; Portfolio concentration
• Public URL: https://hull-repository.worktribe.com/output/4387953