We provide the first large-sample evidence that decentralized voting is widespread within mutual fund families. Contrary to the view that families vote as unified blocs, we find that at least 40% of families exhibit evidence of decentralized voting, starting as early as 2006. We measure decentralization using voting disagreement within the family, which is low unconditionally due to the high volume of routine proposals, but rises substantially for controversial proposals, environmental and social issues, and when proxy advisors recommend voting “against.” Decentralized voting is more prevalent in families with more active funds and greater stewardship resources, and funds within a family vote more similarly when they share management structures and characteristics. Decentralization has consequences for governance and fund investors. First, it weakens the monitoring effectiveness of institutional investors—a result we corroborate using Vanguard's 2019 adoption of decentralized voting as a quasi-natural experiment. Second, funds that deviate from their family’s voting stance charge higher fees without delivering higher returns for clients. Yet, funds that deviate attract higher inflows.

We quantitatively assess the role of activism in the market for corporate control by developing and estimating a model featuring both activism and M&A. We find that activism complements M&A, reducing the agency frictions associated with takeovers. However, activism simultaneously crowds out some M&A activity by substituting for disciplinary takeovers. Both the threat of activism and actual activist intervention create shareholder value by improving CEO incentives, while the value from reduced takeover frictions is primarily captured by acquirers. We find that activists have an information advantage, which is critical to overcoming the free rider problem in activist intervention.

The asset management industry is increasingly shifting toward tailored portfolios, fund proliferation, and decentralization of stewardship – trends partly driven by growing heterogeneity in investor preferences. While these developments better align investment products with investor demands, they also reshape ownership structures, potentially leading to more fragmented ownership and weaker managerial oversight. We develop a framework to evaluate these trade-offs and show that fund proliferation does not necessarily weaken governance: Stronger incentives for asset managers and concentrated portfolios of specialized funds can offset these effects, especially when investor preferences are intense. However, strong investor preferences can also induce asset managers to compete on a new margin – granting investors control by decentralizing stewardship and adopting pass-through voting – without internalizing the associated governance costs.