The Impact of Market Conditions on Voting Results in a Student-Managed Fund

Abstract

The authors analyze voting results for capital allocations from a student-managed fund over a period of three academic years. Primarily, they test for impacts of current and recent market activity on student votes. The fund is managed under the principle of value investing with a long-term investment horizon. A significant relationship between broad market conditions and student votes would support a distinct behavioral influence on the process. They largely find no significant influences from market returns or volatility on the voting results, which suggests students vote on their perception of the merits of the proposal instead of either intentionally or subconsciously allowing market activity to influence their decisions. In the framework of this specific fund, this result corresponds to the fundamentals of value investing and aligns with the educational goal of the program. In ancillary results, the authors find that proposals to buy (acquire a position) are more difficult to pass than those to sell.