Proxy Advice Industry and Its Growing Influence
46 Pages Posted: 2 Jun 2020
Date Written: May 30, 2020
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: Suggested Citation