81 Pages Posted: 14 Feb 2018 Last revised: 19 Mar 2019
Date Written: March 6, 2019
We estimate institutional investor preferences based on their proxy voting records in publicly listed Russell 3000 firms. We employ a spatial model of proxy voting, the W-NOMINATE method for scaling legislatures, and map institutional investors onto a left-right dimension based on their votes for fiscal year 2012. The far-left are socially responsible and the far-right are “moneyconscious” investors. Significant ideological differences reflect an absence of shareholder unanimity. The proxy adviser ISS, similar to a political leader, makes voting recommendations that place it in the center; to the left of most mutual funds. Public pension funds and other investors on the left support a more social and environment-friendly orientation of the firm and fewer executive compensation proposals. A second dimension reflects a more traditional governance view, with management disciplinarian investors, with Glass-Lewis among them, pitted against more management friendly ones.
Keywords: Institutional Investors, Proxy Voting, Ideal Points, Spatial Model of Voting
JEL Classification: G23, G30, D72
Suggested Citation: Suggested Citation