7 - Proxy Advisors

Summary

This chapter looks at the rise of proxy advisors and their influence over corporate governance arrangements. It examines the evidence that proxy advisors: (1) create deeply flawed voting guidelines; (2) promote governance practices that are ineffective or produce adverse corporate outcomes; (3) base their advice on assumptions that do not hold up under scrutiny; (4) adopt voting policies that necessarily occasionally generate perverse outcomes; (5) make mistakes; (6) refuse to correct mistakes; (7) cause their clients to vote in ways that contradict those clients’ own opinions; and (8) are not held accountable by their institutional shareholder clients.