This paper estimates a spatial model of proxy voting, the W-NOMINATE method for scaling legislatures, and maps institutional investors onto a left-right dimension based on their votes for fiscal year 2012. The far-left are socially responsible and the far-right are “money-conscious” investors. Significant ideological differences reflect an absence of shareholder unanimity. The proxy adviser ISS, similar to a political leader makes voting recommendations that place it center-left; to the left of most mutual funds. Public pension funds and other investors on the left support a more social and environment-friendly orientation of the firm and fewer executive compensation proposals.
Visiting Associate Professor of Finance, Kellogg School of Management
Assistant Professor of Finance, Carroll School of Management, Boston College
William J. Friedman and Alicia Townsend Friedman Professor of Law, Economics, and Finance
Harvard Law School