Thy Neighbor's Vote: Peer Effects in Proxy Voting

48 Pages Posted: 26 Nov 2019 Last revised: 30 Jan 2021

See all articles by Jiekun Huang

Jiekun Huang

University of Illinois at Urbana-Champaign - Department of Finance

Date Written: January 30, 2021

Abstract

Institutional investors' proxy voting decisions are influenced by their neighbors. I identify peer effects in proxy voting using close-call votes on shareholder-sponsored governance proposals at publicly traded financial institutions (focal institutions). I first show that the passage of a close vote at a focal institution increases the likelihood that the institution votes against management. Using a triple-difference approach, I find that the passage increases the likelihood that the neighboring institutions vote against management in stocks that are heavily held by the focal institution. These results suggest that peer influence is an important determinant of proxy voting behavior.

Keywords: Peer effects, Proxy voting, Institutional investors, Geography, Corporate governance

JEL Classification: G23, G32, G34

Suggested Citation

Huang, Jiekun, Thy Neighbor's Vote: Peer Effects in Proxy Voting (January 30, 2021). Available at SSRN: https://ssrn.com/abstract=3481315 or http://dx.doi.org/10.2139/ssrn.3481315

Jiekun Huang (Contact Author)

University of Illinois at Urbana-Champaign - Department of Finance ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

HOME PAGE: http://www.huangjk.info

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