On the Role and Regulation of Proxy Advisors

Michigan Law Review First Impressions, Vol. 109, p. 62, 2010

Ohio State Public Law Working Paper No. 142

8 Pages Posted: 1 Feb 2011 Last revised: 3 Feb 2011

See all articles by Paul Rose

Paul Rose

Ohio State University - Moritz College of Law; Bocconi University - BAFFI Center on International Markets, Money, and Regulation; Tufts University - The Fletcher School of Law and Diplomacy; Fundación Instituto de Empresa, S.L. - IE Business School

Date Written: January 31, 2011

Abstract

The role of proxy advisors has increasing relevance because the Securities and Exchange Commission has recently undertaken a review of the mechanisms of proxy voting - less gracefully but perhaps aptly described as “proxy plumbing” - and the role of proxy advisors in that process. This short essay discusses the role of proxy advisors and their regulation. In particular, the essay addresses why institutional investors purchase corporate governance ratings and advice despite the fact that the advice appears to be of poor quality. The essay then discusses potential regulation of proxy advisors by the Securities & Exchange Commission.

Keywords: Proxy voting, proxy advisors, corporate governance ratings, corporate governance industry, RiskMetrics, ISS, proxy plumbing

Suggested Citation

Rose, Paul, On the Role and Regulation of Proxy Advisors (January 31, 2011). Michigan Law Review First Impressions, Vol. 109, p. 62, 2010; Ohio State Public Law Working Paper No. 142. Available at SSRN: https://ssrn.com/abstract=1752165

Paul Rose (Contact Author)

Ohio State University - Moritz College of Law ( email )

55 West 12th Avenue
Columbus, OH 43210
United States

Bocconi University - BAFFI Center on International Markets, Money, and Regulation ( email )

Milano, 20136
Italy

Tufts University - The Fletcher School of Law and Diplomacy ( email )

Medford, MA 02155
United States

Fundación Instituto de Empresa, S.L. - IE Business School ( email )

Calle Maria de Molina 12, Bajo
Madrid, Madrid 28006
Spain

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