Robo-Voting Phenomena: An Empirical Analysis of Institutional Investors’ Voting and Proxy Advisors’ Recommendations

Proxy advisors’ recommendations have emerged as the key determinant of shareholder voting, and the evidence provided in this study raises some questions as to the influence and power of proxy advisors. Despite assertions that proxy advisors are powerful, few empirical studies in relation to their influence on shareholder votes have been conducted in a European context. This study is the first to analyse the robo-voting phenomena in one of the major European markets (Italy). In this way, our paper aims to identify those institutional investors that strictly vote in alignment with external recommendations (including proxy advisors or management recommendations). Our main results are that two main characteristics influence the voting approach of institutional investors: country of residence and size. We think that our results are timely not only because of the general rise of importance of proxy advisor and shareholder voting, but also because the debate on corporate governance has now shifted to fiduciary duty to vote and a focus on social or legal enforcement.