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Influence of Public Opinion on Investor Voting and Proxy Advisors

Author

Listed:
  • Aggarwal, Reena

    (Georgetown University)

  • Erel, Isil

    (OH State University)

  • Starks, Laura T.

    (University of TX)

Abstract

We examine the evolution in voting patterns across firms over time. We find that investors have become more independent in their voting decisions, voting less with the recommendations of management or proxy advisors. Even when the proxy advisor recommends voting against a proposal, we find that over time investors are more likely to ignore the recommendation. Moreover, we also find that proxy advisory recommendations have become more supportive of shareholder proposals. Our main contribution is to examine the role of public opinion in influencing shareholder voting. We show that public opinion on corporate governance issues, as reflected in media coverage and surveys, is strongly associated with investor voting, particularly mutual fund voting.

Suggested Citation

  • Aggarwal, Reena & Erel, Isil & Starks, Laura T., 2014. "Influence of Public Opinion on Investor Voting and Proxy Advisors," Working Paper Series 2014-12, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
    • Handle: RePEc:ecl:ohidic:2014-12
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    Cited by:

    1. Dasgupta, Amil & Fos, Vyacheslav & Sautner, Zacharias, 2021. "Institutional investors and corporate governance," LSE Research Online Documents on Economics 112114, London School of Economics and Political Science, LSE Library.
    2. David, Thomas & Di Giuli, Alberta & Romec, Arthur, 2023. "CEO reputation and shareholder voting," Journal of Corporate Finance, Elsevier, vol. 83(C).
    3. Dressler, Efrat, 2020. "Voice and power: Do institutional shareholders make use of their voting power?," Journal of Corporate Finance, Elsevier, vol. 65(C).
    4. Farizo, Joseph D., 2022. "(Black)Rock the vote: Index funds and opposition to management," Journal of Corporate Finance, Elsevier, vol. 76(C).

    More about this item

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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