As individual investors who act independently can generate only limited influence on
corporate decisions, this paper considers clustered institutional investors connected through …

Benchmarking incentivizes fund managers to invest a fraction of their funds' assets in their
benchmark indexes, and such demand is inelastic. We construct a measure of inelastic …

Active equity funds care about fund size, affected by fund flows that obey a strong factor
structure with the common component responding to macroeconomic shocks. Funds hedge …

We model asset management as a continuum between active and passive: managers can
deviate from benchmark indices to exploit noise trader–induced distortions, but agency …

We study the joint portfolio and information choice problem of institutional investors who are
concerned about their performance relative to a benchmark. Benchmarking influences …

We argue that the pervasive practice of evaluating portfolio managers relative to a
benchmark has real effects. Benchmarking generates additional, inelastic demand for assets …

Institutional ownership is thought to facilitate short-selling, as short sellers typically borrow
from the holdings of institutions. Yet, institutional demand, and hence lending supply, is …

We identify a novel economic mechanism through which passive ownership positively
affects informational efficiency in the cross-section of firms. Passive investors' inelastic …

Using a panel of self-declared benchmarks, we examine funds' use of mismatched
benchmarks over time. Mismatching is high at the beginning of our sample (45% of TNA in …

I propose an arbitrage-pricing approach to analyze how noise trading flows impact asset
prices. This approach uses no-arbitrage conditions to determine the impact of these flows on …