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In late January 2003, the Securities and Exchange Commission (SEC) adopted new rules for investment advisers under the Investment Advisers Act of 1940 (Advisers Act) requiring them to adopt and disclose to clients proxy voting policies and procedures. Concurrently, the SEC adopted new rules for registered investment companies (funds) under the Investment Company Act of 1940 (1940 Act) requiring them to disclose their proxy voting policies and procedures to their shareholders and to file their voting records with the SEC. The compliance dates for the new Rules are approaching fast. The Rules should have a significant impact on disclosure of proxy voting by advisers and funds. In a recent survey it conducted, Institutional Shareholder Services (ISS) noted that, of the approximately 3,700 fund groups that will be affected by the Rules, only eleven funds publicly disclose their proxy voting policies on their public websites. Of the eleven funds, seven disclose their proxy voting records and none discloses its policies with respect to conflicts of interest.

In recent action, the Securities and Exchange Commission adopted rules requiring SEC‐registered investment advisers (“investment advisers” or “advisers”) and registered management investment companies (“investment companies” or “mutual funds”) to adopt and disclose the policies and procedures they use to vote proxies relating to portfolio securities. In addition, investment advisers must disclose to clients how they can obtain information from the adviser on how their securities were voted and registered. Management investment companies must file with the Commission and make available to fund shareholders the specific proxy votes they cast.

This study aims to examine the role of institutional investors (using proxy voting and voice) in influencing the decisions and governance landscape of their investee firms.

The authors use exploratory research design due to the underdevelopment of the problem phenomena, especially in the context of emerging economies. Using asset management companies (AMC) as a proxy for institutional investors, the authors use a multiple case study design. This design was relevant in the setting as it assured triangulation by studying the same phenomenon across firms with distinct characteristics. The authors sourced the data for the multiple cases from primary sources (such as semi-structured interviews) and secondary sources (such as official Webpages and social media pages of AMC and examination of archival documents). Finally, the authors used qualitative content analysis to analyse the data.

The findings suggest that shareholder activism by institutional investors has grown in India over the period, particularly in matters related to corporate governance, related party transactions, remuneration and compensation. These AMC in India use proxy voting services for advising on voting resolutions in their investee companies. However, voting by AMC does not generally affect resolution results. This is particularly true in the presence of a high concentration of promoter holdings in investee companies.

The study is a novel attempt in an emerging market context to explore the role of institutional investors in influencing firm decisions and improving the governance landscape of the company using proxy voting and voice. This is especially important as the institutional framework in emerging markets is not as strong as in developed markets.

This paper aims to explore the voting recommendations made by proxy advisory firms in India by descriptively analyzing the “Vote Against” recommendations made by two proxy advisory firms for shareholder resolutions for the listed Indian firms. It also empirically tests the relationship between proportion of “Vote Against” recommendations and the parameters which are proved to be influencing corporate governance practices of a firm.

Empirical analysis of proxy voting recommendations for a sample of 77 listed non-financial Indian firms across four financial years.

The paper finds that two categories of shareholders proposals, “reappointment of non-executive directors” and “remuneration of statutory auditors”, account for 83.5 per cent of “Vote Against” recommendations. Further, there are significant differences in the proportion of “Vote Against” recommendations based on the type of “controlling ownership” of the firms. The regression analysis indicates that the relationships between proportion of “Vote Against” recommendations and determinants of corporate governance practices are mostly in line with the a priori expectations, as far as ownership is concerned but requires further analysis for other parameters.

Exploratory nature of this paper opens up new research issues in the upcoming Indian Proxy advisory industry. It suggests that the future research should consider the controlling ownership as an important parameter while analyzing the proxy firm recommendations.

Indian proxy advisory industry requires lots of nurturing from the regulators, and this exploratory study provides the basic insights in this regard. It also highlights potential corporate governance issues where the regulators need to tighten the corporate governance norms, like reappointment of independent directors and appointment of statutory auditors.

Pioneering Study in understanding the proxy advisory voting recommendations in an emerging market.

This systematic literature review analyses the determinants and consequences of executive compensation-related shareholder activism and say-on-pay (SOP) votes. The review covers 71 empirical articles published between January 1995 and September 2017. The studies are reviewed within an empirical research framework that separates the reasons for shareholder activism and SOP voting dissent as input factor on the one hand and the consequences of shareholder pressure as output factor on the other. This procedure identifies the five most important groups of factors in the literature: the level and structure of executive compensation, firm characteristics, corporate governance mechanisms, shareholder structure and stakeholders. Of these, executive compensation and firm characteristics are the most frequently examined. Further examination reveals that the key assumptions of neoclassical principal agent theory for both managers and shareholders are not always consistent with recent empirical evidence. First, behavioral aspects (such as the perception of fairness) influence compensation activism and SOP votes. Second, non-financial interests significantly moderate shareholder activism. Insofar, we recommend integrating behavioral and non-financial aspects into the existing research. The implications are analyzed, and new directions for further research are discussed by proposing 19 different research questions.

To provide an overview of the guidance for proxy firms and investment advisers included in the Staff Legal Bulletin released this year by the Securities and Exchange Commission (SEC) after its four-year comprehensive review of the proxy system.

Discusses briefly the context in which the SEC’s review was conducted; the general themes of the guidance provided; the most notable aspects of the guidance; and the matters that were expected to be, but were not, addressed by the SEC.

The guidance does not go as far in regulating proxy advisory firms as many had anticipated it would. The key obligations specified in the guidance are imposed on the investment advisers who engage the proxy firms. The responsibilities, policies and procedures mandated do not change the fundamental paradigm that has supported the influence of proxy firms – that is, investment advisers continue to be permitted to fulfill their duty to vote client shares in a “conflict-free manner” by voting based on the recommendations of independent third parties, and continue to be exempted from the rules that generally apply to persons who solicit votes or make proxy recommendations.

The SEC staff states in the Bulletin that it expects that proxy firms and investment advisers will conform to the obligations imposed in the Bulletin “promptly, but in any event in advance of [the 2015] proxy season.”

Practical guidance from experienced M&A lawyers.

E-corporate governance or the use of technologies and information systems (ISs) in corporate governance, is still a subject that is too seldom addressed in business research. This paper is at the intersection between two fields of research (corporate governance and the management of ISs), which are interdependent in ways that are still unexplored. The paper analyzes the implications of internet voting (IV) at shareholders’ annual meetings (SAM) for the corporate governance of listed companies in France, in particular for the relationship between executives and shareholders. Most of the studies that have dealt with IV at SAM have focused on techno-legal issues and were often conducted by business law researchers. The purpose of this paper is to investigate the implications of the new voting system through the prism of corporate governance.

The authors proceeded by triangulation of methods. This qualitative study is based on observations, interviews and documentary analysis. It assessed the IV implications for both the issuing companies and the shareholders.

The new voting system brings undeniable competitive advantage to the issuing company and facilitates shareholders’ activism, yet it has serious risks both for the corporations and for certain categories of the shareholder. Interestingly, the authors propose an original and field-grounded typology that distinguishes the risks and benefits associated with IV in relation to executives’ attitudes.

The paper shows that the resolving of identified deficiencies with IV development could contribute to the alignment of companies’ interests with those of shareholders. Moreover, the study calls for policymakers to appoint an official body to regulate the practical implementation of the new system and to prevent its dissemination being held hostage to the executives’ willingness.

An original aspect of this research lies in the effective operationalization of the constructs of corporate governance effectiveness with a view to examining corporate governance as a set of technologically mediated practices. Moreover, this study emphasizes the key role of the construct of “executives’ willingness” in facilitating/impeding IV diffusion. This underlies their attempts to reverse the corporate governance relationship.

In this part of the research, we consider the costs of the turnout decision and evaluate whether the introduction of the Shareholder Rights Directive (2007/36/EC), which aimed at lowering voting costs, has had a positive impact on (small) shareholder attendance. For this, we investigate turnout rates in Belgium, France and the Netherlands. We find strong indications that the Shareholder Rights Directive indeed had a positive impact on (small) shareholder attendance in these countries. The findings of this study may encourage policy makers to further reduce the costs of (cross-border) voting. It shows that the introduction of the new Shareholder Rights Directive may contribute to (small) shareholder engagement.

This paper aims to clarify the relationship between the voting and engagement behaviour of institutional investors, i.e. institutional investor stewardship behaviour, and the enactment of stewardship by corporate boards. In doing so, this paper contributes to the evaluation of contemporary corporate governance systems and provides recommendations for the redesign of these systems.

This paper is based on a qualitative exploratory descriptive research study into assumed, prescribed and the actual behaviour of institutional investors. Their behaviour is explored through a survey and in-depth interviews with global institutional investors.

The prescription of institutional investor stewardship behaviour and the exploration of actual behaviour from an investors’ perspective led to the conclusion that assumed institutional investor stewardship exists variously as either “in form” (i.e. measured by compliance to the relevant corporate governance code) or “in substance” (i.e. the actual behaviour from the investors and investee companies’ perspective). The results suggest that that institutional investors’ actual stewardship behaviour as global investors requires a nuanced conclusion about the existence of institutional investor stewardship.

Although the number of semi-structured interviews with institutional investors was limited to just 14, these interviewees represent the majority share in terms of market capitalisation of Dutch listed companies. Additional research could clarify the perspective of other investors, such as pension funds and private investors.

The outcome of this research can serve as input for corporate governance reforms in the preambles of governance codes and the prescribed principles and best practice provisions of corporate governance and stewardship codes. This research identifies opportunities for further academic research to enrich the understanding of the role of institutional investors in enacting corporate stewardship.

This paper contributes to furthering the understanding of the mechanisms by which institutional investors, through their behaviour, contribute to enacting stewardship through their corporate boards. This is an important part of the corporate social responsibility of institutional investors. It also triggers a dialogue about the social and environmental impacts of stock listed companies.

This paper fulfils an identified need to develop knowledge about new paradigms and offers a more integrated approach to corporate governance reforms in terms of the role of institutional shareholders in the promotion of good corporate governance.

The purpose of this paper is to examine social issue proxy filings by shareholders of US corporations in a period commonly referred to as the “shareholder spring” to understand who the filers are, what issues are typically the focus of the filings, what the dominant strategy is of various filers and the success rate of proxy-based shareholder social activism.

Using the shareholder-filed proxy as the unit of analysis, the study parsed the data from 410 proxies to gain insight into the process of shareholder social activism.

Religious groups, in contrast to large pension and mutual funds, use a small shareholding approach to form coalitions with other stakeholders to gain voting support. Proxies that call for disclosure elicit greater support than those that demand a change in a company’s business practices. If the goal of shareholder social activism is to keep the proxy issue alive from one shareholder meeting to the next, then non-individual proxy filers can be considered successful.

While the study only considered proxies for 250 of the Fortune 500 companies, there is evidence that social activism can succeed if a coalition strategy is used and the shareholder’s motives appear to be legitimately altruistic.

It is important for corporate managers to consider the prevailing shareholder sentiment on social issues because such sentiments largely echo general societal concerns.

While the debate is still unsettled on the shareholder versus the stakeholder argument, there is a high level of scrutiny on how a company operates in the larger societal context.

Propelled by the Dodd–Frank law and the shareholder spring movement, certain types of shareholders (primarily religious groups) are quite adept at eliciting support for social issues because of both their legitimacy and by the strategy that they follow.