ECGI Conversations - Nadya Malenko

Dr. Tom Gosling interviews Nadya Malenko, Professor of Finance at Boston College, to discuss her paper Custom Proxy Voting Advice, co-authored with Edwin Hu, Associate Professor at the University of Virginia Law School and and Jonothan Zytnick, Associate Professor at Georgetown University Law School.

The key discussion points are:

• Despite the focus on benchmark proxy adviser recommendations, most investors adopt a custom voting policy tailored to their preferences.
• Custom recommendations differ from benchmark recommendations about 20% of the time.
• Funds are likely to customize if they differ ideologically from the proxy adviser’s benchmark policy, if economies of scale matter (e.g. the fund has many securities) or voting is important to the fund (e.g. typical portfolio company stakes are large).
• Customization allows funds to:
  • Align voting with their ideology
  • Reduce the time spent on voting overall
  • Free up resources to focus more than non-customizers on important or contentious votes
• Regulators need to be careful about the unintended consequences of blunt regulation of proxy advisers which could lead to less rather than more considered voting.

We hope you enjoy the conversation. For more interviews in this series, visit this page.