The Journal of Law and Economics· 2026Q1
Big Three (Dis)Engagements
- 7citations
- Q1SCImago
- 2026year
Short summary
The three largest asset managers (BlackRock, Vanguard, State Street) use engagement with portfolio companies primarily as a marketing tool, not to increase portfolio value or satisfy client non-pecuniary preferences.
AI-generated from the title and abstract; the full text is not read.
Key points
- Engagement targets of the Big Three asset managers are unrelated to portfolio firm financial performance or corporate emissions.
- Engagement is unlikely to be driven by clients' heterogeneous non-pecuniary preferences on contested issues.
- Event study analysis shows transitory negative but tiny abnormal returns for targeted firms when engagements are reported.
- Engagement is not associated with subsequent stock returns, operating performance, or governance changes at portfolio companies.
AI-generated from the title and abstract; the full text is not read.
Abstract
This paper uses newly available data to analyze how the three largest asset managers (BlackRock, Vanguard, and State Street) structure engagements with portfolio companies. These engagements could plausibly be aimed at increasing risk-adjusted portfolio value, marketing the asset manager to clients, or catering to clients’ non-pecuniary preferences. We find little support for engagement being aimed at increasing risk-adjusted portfolio value: asset managers’ choice of engagement targets is unrelated to portfolio firm financial performance or negative externalities as proxied by corporate emissions. We argue that it is unlikely that engagements are aimed at satisfying clients’ heterogeneous preferences on contested non-financial issues, and conclude that the Big Three asset managers likely see engagement as a form of marketing. Event study analysis finds that targeted firms exhibit transitory negative but tiny abnormal returns when engagements are reported. Engagement is not associated with ex post stock returns or changes in operating performance or corporate governance outcomes at portfolio companies. Asset managers are not more likely to vote against management at firms selected for engagement.
The authors' abstract, as published at the source. The Journal of Law and Economics, 2026 · DOI ↗
Continue with a free account
Ask the paper: 3 free questions a day about this paper; save it, get its citation, new summaries every day for your field. Takeaways are Premium.
Continue free on the webSign in with Google or Apple; no card needed. You come back to this paper.
On your phone:
AccountingBusiness, Management and Accounting