Proxy Advice Industry and Its Growing Influence

46 Pages Posted: 2 Jun 2020

See all articles by Chong Shu

Chong Shu

University of Southern California - Marshall School of Business

Date Written: May 30, 2020

Abstract

This paper documents the evolving proxy advice industry and its growing influence on investors’ votes. Using an innovative method, I identify mutual funds’ purchases of proxy advice. As of 2017, ISS controls 63% of the market for mutual funds in the U.S. and Glass Lewis controls 28% of the market. Over the years, the industry has become less concentrated: in 2007, ISS controlled 74% of the market. However, ISS’s one-size-fits-all recommendation has a strong and growing influence over its customers’ votes. From 2006 to 2017, the fraction of ISS’s customers who robo-vote grows from 12% to 23%. The growing influence of ISS is manifested in director elections, say-on-pay proposals, and other shareholder-sponsored proposals.

Keywords: Proxy Advisor, Mutual Fund Voting, Robo-Vote

JEL Classification: G23, G34, G38, G40

Suggested Citation

Shu, Chong, Proxy Advice Industry and Its Growing Influence (May 30, 2020). USC Marshall School of Business Research Paper. Available at SSRN: https://ssrn.com/abstract=3614314 or http://dx.doi.org/10.2139/ssrn.3614314

Chong Shu (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
56
Abstract Views
538
rank
401,327
PlumX Metrics