The Role of Proxy Advisory Firms: Evidence from a Regression-Discontinuity Design

• 成果类型: Article
• 署名作者: Malenko, Nadya; Shen, Yao
• 署名单位: Boston College; City University of New York (CUNY) System; Baruch College (CUNY)
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhw070
• 发表日期: 2016
• 页码: 3394
• 关键词: INSTITUTIONAL OWNERSHIP; weak instruments; Mutual funds; pay; COMPENSATION; investors; VOTE

摘要

Proxy advisory firms have become important players in corporate governance, but the extent of their influence over shareholder votes is debated. We estimate the effect of Institutional Shareholder Services (ISS) recommendations on voting outcomes by exploiting exogenous variation in ISS recommendations generated by a cutoff rule in ISS voting guidelines. Using a regression discontinuity design, we find that from 2010 to 2011, a negative ISS recommendation on a say-on-pay proposal leads to a 25 percentage point reduction in say-on-pay voting support, suggesting a strong influence over shareholder votes. We also use our setting to examine the informational role of ISS recommendations.