Big Three (Dis)Engagements

This paper uses newly available data to empirically analyze how the three largest asset managers (BlackRock, Vanguard, and State Street) engage with portfolio companies. Event study analysis finds that targeted firms exhibit transitory negative but tiny abnormal returns when engagements are reported. We find that asset managers’ choice of engagement targets is virtually unrelated to firm financial performance. Asset managers are not more likely to vote against management at firms selected for engagement. Combined with qualitative evidence regarding the limited resources available to engagement personnel, these results cast doubt on the Big Three asset managers’ ability to be active owners.