Do local proxy advisors matter? - Evidence from Germany

Accounting and Business Research

41 Pages Posted: 12 Sep 2018 Last revised: 25 Jun 2021

See all articles by Christopher Koch

Christopher Koch

Johannes Gutenberg University Mainz - Gutenberg School of Economics and Management

Vanda Rothacker

Johannes Gutenberg University Mainz

Mario Scharfbillig

Johannes Gutenberg University Mainz - Gutenberg School of Management and Economics

Date Written: June 30, 2021

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.

Keywords: Proxy Advisor, Corporate Governance, Institutional Investors, Annual General Meeting, Voting Recommendations, Voting Outcomes

JEL Classification: G38, G30, G32, M40

Suggested Citation

Koch, Christopher and Rothacker, Vanda and Scharfbillig, Mario, Do local proxy advisors matter? - Evidence from Germany (June 30, 2021). Accounting and Business Research, Available at SSRN: https://ssrn.com/abstract=3241322 or http://dx.doi.org/10.2139/ssrn.3241322

Christopher Koch (Contact Author)

Johannes Gutenberg University Mainz - Gutenberg School of Economics and Management ( email )

Mainz
Germany
+49 (6131) 3929990 (Phone)

HOME PAGE: http://https://www.cg.bwl.uni-mainz.de/

Vanda Rothacker

Johannes Gutenberg University Mainz ( email )

Saarstr. 21
Jakob Welder-Weg 4
Mainz, 55122
Germany

Mario Scharfbillig

Johannes Gutenberg University Mainz - Gutenberg School of Management and Economics ( email )

Germany

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