Discussion paper

DP16352 Creating controversy in proxy voting advice

We analyze the design of vote recommendations and research reports by a profit-maximizing proxy advisor. The advisor benefits from biasing its recommendations against the a priori likely alternative, thereby "creating controversy" for the vote. Conversely, it serves the advisor's interest to produce precise and unbiased reports. Our results suggest a move away from exclusive emphasis on recommendations, highlighting that both reports and recommendations are important in proxy advisors' information provision. They rationalize the one-size-fits-all approach in recommendations and help reinterpret empirical patterns of voting behavior, suggesting that proxy advisors' recommendations may not be a suitable benchmark for evaluating shareholders' votes.


Malenko, A, N Malenko and C Spatt (2022), ‘DP16352 Creating controversy in proxy voting advice‘, CEPR Discussion Paper No. 16352. CEPR Press, Paris & London. https://cepr.org/publications/dp16352