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Institutional shareholders, proxy advisor recommendation, and vote outcomes in shareholder meetings

Author

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  • Dubois, Edouard
  • McGinty, Sean
  • Uchida, Konari
  • Chen, Yenn-Ru
  • Fu, Jyun-Ying

Abstract

Our investigations into the shareholder meetings of UK indexed companies indicate that vote outcomes become more sensitive to proxy advisor recommendations as ownership by well-diversified foreign institutions increases. Vote sensitivity is associated especially with ownership by well-diversified institutional investors that speak a different language. The results support the recent regulatory focus on proxy advisory firms and on how institutional investors manage their fiduciary duties. The findings are supported by firm*agenda fixed-effects models, matching analyses of director election, alternative definitions of portfolio diversification, and examination of specific countries’ institutions that reduce endogeneity biases. French and Japanese data also show qualitatively the same result.

Suggested Citation

  • Dubois, Edouard & McGinty, Sean & Uchida, Konari & Chen, Yenn-Ru & Fu, Jyun-Ying, 2023. "Institutional shareholders, proxy advisor recommendation, and vote outcomes in shareholder meetings," Research in International Business and Finance, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:riibaf:v:66:y:2023:i:c:s0275531923001289
    DOI: 10.1016/j.ribaf.2023.102002
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    References listed on IDEAS

    as
    1. Peter Iliev & Michelle Lowry, 2015. "Are Mutual Funds Active Voters?," The Review of Financial Studies, Society for Financial Studies, vol. 28(2), pages 446-485.
    2. Nadya Malenko & Yao Shen, 2016. "The Role of Proxy Advisory Firms: Evidence from a Regression-Discontinuity Design," The Review of Financial Studies, Society for Financial Studies, vol. 29(12), pages 3394-3427.
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    Cited by:

    1. Miyachi, Hiroaki & Takeda, Fumiko, 2024. "Empirical study on voting results and proxy advisor recommendations in Japan," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 92(C).

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