Investor Ideology

81 Pages Posted: 14 Feb 2018 Last revised: 19 Mar 2019

See all articles by Patrick Bolton

Patrick Bolton

Columbia Business School - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Tao Li

University of Florida - Department of Finance, Insurance and Real Estate

Enrichetta Ravina

Kellogg School of Management

Howard Rosenthal

New York University

Multiple version iconThere are 4 versions of this paper

Date Written: March 6, 2019

Abstract

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

Bolton, Patrick and Li, Tao and Ravina, Enrichetta and Rosenthal, Howard, Investor Ideology (March 6, 2019). Columbia Business School Research Paper No. 18-21; European Corporate Governance Institute (ECGI) - Finance Working Paper No. 557/2018. Available at SSRN: https://ssrn.com/abstract=3119935 or http://dx.doi.org/10.2139/ssrn.3119935

Patrick Bolton (Contact Author)

Columbia Business School - Department of Economics ( email )

420 West 118th Street
New York, NY 10027
United States

HOME PAGE: http://www0.gsb.columbia.edu/faculty/pbolton/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Tao Li

University of Florida - Department of Finance, Insurance and Real Estate ( email )

Warrington College of Business
Gainesville, FL 32611
United States

HOME PAGE: http://warrington.ufl.edu/contact/profile.asp?WEBID=7628

Enrichetta Ravina

Kellogg School of Management ( email )

Evanston, IL 60208
United States
8474676872 (Phone)

HOME PAGE: http://https://sites.google.com/view/eravina/home

Howard Rosenthal

New York University ( email )

19 W 4th St
New York, NY New York 10012
United States
4155199591 (Phone)
4155199591 (Fax)

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