Publications
Publications
- 2021
- HBS Working Paper Series
Proxy Advisory Firms and Corporate Shareholder Engagement
By: Aiyesha Dey, Joshua White and Austin Starkweather
Abstract
We examine the influence of proxy advisors on firms’ shareholder engagement behavior. Our analyses exploit a quasi-natural experiment using Say-On-Pay voting outcomes near a threshold that triggers a review of engagement activities by Institutional Shareholder Services (ISS). Firms receiving ISS treatment exhibit a swift and substantive increase in engagement, especially those with weaker ex-ante governance. The elevated engagement persists beyond the period of ISS scrutiny. Treated firms alter elements of compensation and pay transparency that align with shareholder feedback, and enjoy ex-post economic benefits. Our findings indicate a disciplinary spillover effect of ISS through enhanced and enduring firm-shareholder interactions.
Keywords
Proxy Advisors; ISS; Shareholder Engagement; Disclosure; Business and Shareholder Relations; Executive Compensation; Corporate Disclosure
Citation
Dey, Aiyesha, Joshua White, and Austin Starkweather. "Proxy Advisory Firms and Corporate Shareholder Engagement." Harvard Business School Working Paper, No. 21-137, June 2021.
About The Author
