Numerous asset managers automatically rely on proxy firms’ recommendations in an alarming practice known as robo-voting, the practice of investors automatically relying on proxy advisors’ recommendations without evaluating their merits. This paper, The Realities of Robo-Voting, identifies those asset managers that have historically voted in line with the recommendations of the largest proxy advisory firm, Institutional Shareholder Services (ISS).
While major fund advisors have internal analysts to implement voting policies, the research reiterates the conclusion that many investors are not carrying out their due diligence themselves, finding that 175 entities with more than $5 trillion in assets under management have followed the proxy advisory firm over 95% of the time.
The conclusions are a direct challenge to proxy advisors claims that their role is limited to providing intelligence. While ISS argues the company is an “independent provider of data, analytics and voting recommendations to support our clients in their own decision-making,” the research shows that it is directly impacting shareholder votes within America’s public companies.
Read the ACCF report, The Realities of Robo-Voting, to learn more.