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Do local proxy advisors matter? – Evidence from Germany

Author

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  • Christopher Koch
  • Vanda Rothacker
  • Mario Scharfbillig

Abstract

Prior research documents that the large US-based proxy advisors, Institutional Shareholder Services (ISS) and Glass Lewis (GL), play an important role as information intermediaries in corporate governance worldwide. We provide initial evidence on the role of local proxy advisors, using the German setting. We analyse voting recommendations by local (IVOX) and foreign (ISS, GL) proxy advisors. First, we find that IVOX's voting recommendations differ substantially from those of ISS and GL. Second, we observe that IVOX's against-recommendations are significantly negatively associated with voting support. Third, we find that this association is particularly negative for voting outcomes at companies where local institutional investors hold larger stakes. Taken together, our findings suggest that the local proxy advisor IVOX considers relevant factors appreciated by local institutional investors that are distinct from factors incorporated in foreign proxy advisors’ voting recommendations.

Suggested Citation

  • Christopher Koch & Vanda Rothacker & Mario Scharfbillig, 2023. "Do local proxy advisors matter? – Evidence from Germany," Accounting and Business Research, Taylor & Francis Journals, vol. 53(1), pages 83-107, January.
    • Handle: RePEc:taf:acctbr:v:53:y:2023:i:1:p:83-107
    DOI: 10.1080/00014788.2021.1946382
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