Research Examines Role of Governance in Portfolio Results

Drexel Governance Conference awards WRDS Best Paper prize

Philadelphia, PA (Business Wire) – Wharton Research Data Services (WRDS) is pleased to announce Marco Becht, Goldschmidt Professor of Corporate Governance at Université libre de Bruxelles, Solvay Brussels School of Economics and Management; Julian R. Franks, Professor at London Business School; and Hannes F. Wagner, Associate Professor at Bocconi University as recipients of the Drexel Governance Conference WRDS Best Paper Award.

The award recognizes the authors’ novel research approach, which utilized datasets through WRDS including Factset Ownership, Compustat and FTSE, and proprietary asset management data from Standard Life Aberdeen — to understand the impact of portfolio managers’ interactions with firms in generating alpha and how asset managers engage with companies in which they invest. A part of the Wharton School of the University of Pennsylvania, WRDS provides global corporations, universities and regulatory agencies the thought leadership, data access and insights needed to enable impactful research.

The authors examined how active managers engage with portfolio firms and what role mon­itoring and engagement play in their trading decisions. Their sample was based on nine years of daily data, offering a deep look at fund managers’ decision-making around firms flagged for monitoring, with a special focus on private engagement.

Their paper, “Corporate Governance Through Voice and Exit” show for the first time that trading decisions are at least partially correlated with governance information, making active engagement with firms central to the work of portfolio managers and their results.

Co-author Hannes Wagner hopes that their results prompt other asset managers to open their data to academic researchers in order to increase understanding of the impact of portfolio activities.

“WRDS is extremely pleased to recognize Marco, Julian and Hannes for their approach to research,” said Robert Zarazowski, Managing Director of WRDS. “Their use of WRDS provides a view of the inner workings of asset managers, and correlates their decisions with portfolio performance. This is the level of impact-driven work that WRDS celebrates.”

The authors presented their paper at the American Finance Association (ASSA/AFA) conference in January.

As noted in their paper, this research focused on voice and exit, raising a question about whether the contribution to alpha derives from an informational advantage or from changes in the portfolio firm that result from engagement. The authors plan to explore that question in a future paper.

About WRDS
Wharton Research Data Services (WRDS) is the leading business intelligence, data analytics, and research platform for global institutions ̶ enabling comprehensive thought leadership, historical analysis, and insight into the latest innovations in academic research.

WRDS democratizes data access so that all disciplines, Accounting, Banking, Economics, ESG, Finance, Healthcare, Insurance, Marketing, and Statistics, can easily search for concepts across the data repository. Partnering with global vendors, WRDS hosts 350+TB of data — the broadest collection of data on the most robust computing infrastructure to give users the power to analyze complex information at speeds of up to 400MB per second.

Flexible data delivery options include a powerful web query method that reduces research time; the WRDS Cloud for executing research and strategy development; and the WRDS client server using SAS, Python, R, Stata, Matlab, and more. Our rigorous data review and validation give users the confidence to tailor research and create a wide range of reliable data models.

WRDS’ unique array of Services include access to a suite of Analytics tools developed by our doctoral-level research team, tutorials, research support, and Learning Pathways by WRDS — online learning and instructor pathways — providing curated, guided, online resources for Researchers, Instructors, and Information Professionals. Through Data, Analytics, Research and Technology, approach your research using real world examples and advance your analysis to answer the most critical questions with your data.

WRDS is a leader in impactful research. Through a partnership with SSRN, WRDS is elevating the visibility of universities and researchers working across an array of fields. The WRDS Research Paper Series is a searchable repository of all papers submitted to SSRN that cite WRDS in their work. In addition, the two organizations have launched the WRDS-SSRN Innovation Award™ to honor emerging business schools in North America, Asia Pacific, and EMEA.

WRDS is more than just a data platform. Supporting over 75,000 commercial, academic, and government users at 500+ institutions in 35+ countries, WRDS is the global gold standard in data management, innovative tools, analytics, and research services — all backed by the credibility and leadership of the Wharton School.

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Wharton Research Data Services