“Does institutional shareholder activism benefit the monitoring firm?”

Abstract Many empirical studies have proved that shareholder activism has a negative or negligible impact on the share value and profitability of investee firms. This study aims to understand the impact of shareholder activism on the profitability of the monitoring firm and not the target firm. The mutual fund regulator made it mandatory for them to exercise their votes in their investee companies actively. Voting actively is an indicator of achieving shareholder activism. The present study sheds light on how the voting pattern of mutual fund companies affected their financial performance in the last 5 years. Data have been collected from annual reports of the top 30 mutual funds selected for the study. The stepwise regression analysis is executed to evaluate the effect of votes cast on these performance indicators. It was found that institutional shareholder activism has negligible influence on their financial performance.