Working Paper: CEPR ID: DP13633
Authors: Patrick Bolton; Tao Li; Enrichetta Ravina; Howard Rosenthal
Abstract: We estimate institutional investor preferences based on their proxy voting records in publicly listed Russell 3000 firms. We employ a spatial model of proxy voting, the W-NOMINATE method for scaling legislatures, and map institutional investors onto a left-right dimension based on their votes for fiscal year 2012. The far-left are socially responsible and the far-right are “money conscious” investors. Significant ideological differences reflect an absence of shareholder unanimity. The proxy adviser ISS, similar to a political leader, makes voting recommendations that place it in the center; to the left of most mutual funds. Public pension funds and other investors on the left support a more social and environment-friendly orientation of the firm and fewer executive compensation proposals. A second dimension reflects a more traditional governance view, with management disciplinarian investors, the proxy adviser Glass-Lewis among them, pitted against more management friendly ones.
Keywords: proxy voting; institutional investors; socially responsible investment
JEL Codes: G30; G32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Institutional investor votes (G23) | Ideological differences (P39) |
| Voting behavior (D72) | Ideological positions (P16) |
| Left-right ideological spectrum (P19) | Voting behavior (D72) |
| Proxy advisors' positioning (G34) | Mutual funds' voting behavior (G34) |
| Voting behavior (D72) | Governance dimension (H11) |