Outsourcing Corporate Governance: Conflicts of Interest Within the Proxy Advisory Industry
研究发现代理投票咨询公司同时服务公司和投资者时存在利益冲突，新进入者的竞争能减少对管理层的偏袒，且偏袒建议会导致管理层获取更多私人利益。
Proxy advisory firms wield large influence with voting shareholders. However, conflicts of interest may arise when an advisor sells services to both investors and issuers. Using a unique data set on voting recommendations, I find that for most types of proposals, competition from a new entrant reduces favoritism toward management by an incumbent advisor that serves both corporations and investors. The results are not driven by factors that influence the entrant’s coverage decision, such as the marginal cost of new coverage or previously biased recommendations by the incumbent. Similar to other information intermediaries, biased advice by proxy advisors is shown to have real, negative consequences that allow management to enjoy greater private benefits. These results suggest conflicts of interest are a real concern in the proxy advisory industry, and increasing competition could help alleviate them. This paper was accepted by Neng Wang, finance.