Publications
Publications
- 2019
- HBS Working Paper Series
Stewardship Codes and Shareholder Voting on Disputed Ballot Measures
By: Trang T. Nguyen and Charles CY Wang
Abstract
This study examines the impact of stewardship codes on investor voting behavior in disputed ballot measures-- where ISS's recommendation differs from management's recommendation-- across nine countries. U.S. institutional investors' voting behavior in adopting country investments is unaffected. However, we document an economically and statistically significant shift in the voting behavior of shareholders in those adopting-country firms with little U.S. investor presence. In those firms, shareholders' propensity to vote against management in disputed ballot measures more than doubles after the adoption of the stewardship code. This effect is robust and is larger in firms with lower insider ownership. The likelihood that disputed ballot measures fail to pass also increase by more than threefold. Our findings are consistent with stewardship codes being effective in changing voting behavior, but could also indicate a growing reliance on the ISS by institutional investors around the world.
Keywords
Citation
Nguyen, Trang T., and Charles CY Wang. "Stewardship Codes and Shareholder Voting on Disputed Ballot Measures." Harvard Business School Working Paper, No. 20-035, September 2019.