Influence of Public Opinion on Investor Voting and Proxy Advisors

We examine the evolution in voting patterns across firms over time. We find that investors have become more independent in their voting decisions, voting less with the recommendations of management or proxy advisors. Even when the proxy advisor recommends voting against a proposal, we find that over time investors are more likely to ignore the recommendation. Moreover, we also find that proxy advisory recommendations have become more supportive of shareholder proposals. Our main contribution is to examine the role of public opinion in influencing shareholder voting. We show that public opinion on corporate governance issues, as reflected in media coverage and surveys, is strongly associated with investor voting, particularly mutual fund voting.