Discussion paper

DP19050 Custom Proxy Voting Advice

This paper studies institutional investors’ decision-making using novel data from a major proxy advisor. We highlight the significant role of customized proxy advice in shaping shareholders’ voting decisions. About 80% of funds receive customized advice, and custom recommendations differ substantially from benchmark recommendations. We show that customization plays two key roles. First, it helps shareholders express their ideologies through the vote. Second, it facilitates shareholders’ decision-making process by reducing the need to pay attention to every proposal individually and enabling focus on the more important proposals. Customization thus influences both the aggregation of preferences and the aggregation of information in voting outcomes. Our findings offer a new perspective on the role of proxy advisors and suggest a shift away from solely focusing on benchmark recommendations.


Hu, E, N Malenko and J Zytnick (2024), ‘DP19050 Custom Proxy Voting Advice‘, CEPR Discussion Paper No. 19050. CEPR Press, Paris & London. https://cepr.org/publications/dp19050