The Proxy Advisory Industry: Influencing and Being Influenced

62 Pages Posted: 2 Jun 2020 Last revised: 19 Mar 2021

See all articles by Chong Shu

Chong Shu

University of Utah - David Eccles School of Business

Date Written: March 19, 2021


Mutual funds rely on recommendations from proxy advisors when voting in corporate elections. Proxy advisors’ influence has been a source of controversy, but it is difficult to study because information linking funds to their advisors is not publicly available. A key innovation of this paper is to show how fund-advisor links can be inferred from previously unnoticed features of a fund’s SEC filings. Using this method to infer links, I establish several novel facts about the proxy advisory industry. During 2007-2017, the market share of the two largest proxy advisory firms has declined slightly from 96.5 percent to 91 percent, with Institutional Shareholder Services (ISS) controlling 63 percent of the market and Glass Lewis 28 percent in the most recent year. A large fraction of ISS customers appear to have robo-voted, rising from 5 percent in 2007 to 23 percent in 2017, at which time over 50 percent of small index funds robo-voted. Negative recommendations from ISS or Glass Lewis reduce their customers’ votes by over 20 percent in director elections and say-on-pay proposals. Finally, proxy advisors cater to investors’ preferences, adjusting their recommendations to align with fund preferences independent of whether those adjustments lead to recommendations that maximize firm value.

Keywords: Proxy Advisor, Corporate Voting, Robo Voting, Shareholder Rights

JEL Classification: G23, G34, G38, G40

Suggested Citation

Shu, Chong, The Proxy Advisory Industry: Influencing and Being Influenced (March 19, 2021). USC Marshall School of Business Research Paper, Available at SSRN: or

Chong Shu (Contact Author)

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

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