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Compound Conflicts of Interest in the US Proxy System

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  • Cynthia Clark
  • Harry Van Buren

Abstract

The current proxy voting system in the United States has become the subject of considerable controversy. Because institutional investment managers have the authority to vote their clients’ proxies, they have a fiduciary obligation to those clients. Frequently, in an attempt to fulfill that obligation, these institutional investors employ proxy advisory services to manage the thousands of votes they must cast. However, many proxy advisory services have conflicts of interest that inhibit their utility to those seeking to discharge their fiduciary duties. In this article, we describe the current proxy advisory network as an example of how current notions of conflicts of interest fall short when explaining the behavior of an interconnected set of market players whose remit is to act in the best interests of their investors. We discuss what participants in this system should do to bring transparency and accuracy to the proxy advice industry. Copyright Springer Science+Business Media B.V. 2013

Suggested Citation

  • Cynthia Clark & Harry Van Buren, 2013. "Compound Conflicts of Interest in the US Proxy System," Journal of Business Ethics, Springer, vol. 116(2), pages 355-371, August.
    • Handle: RePEc:kap:jbuset:v:116:y:2013:i:2:p:355-371
    DOI: 10.1007/s10551-012-1460-x
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    References listed on IDEAS

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    Cited by:

    1. Efrat Dressler & Yevgeny Mugerman, 2023. "Doing the Right Thing? The Voting Power Effect and Institutional Shareholder Voting," Journal of Business Ethics, Springer, vol. 183(4), pages 1089-1112, April.
    2. Erica Steckler & Cynthia Clark, 2019. "Authenticity and Corporate Governance," Journal of Business Ethics, Springer, vol. 155(4), pages 951-963, April.

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