Mirror Voting

We provide the first evidence of how proposed changes to passive-fund voting rules would have altered historical outcomes. We find that market mirroring, in which the passive block votes shares in proportion to other votes cast, would have changed fewer than half a percent of outcomes, and potentially much less, depending on the methodology used. In contrast, voting rules that mirror management or proxy advisors would have had significant impacts, particularly for contentious items. We also test objections raised to market mirroring, including the limiting case in which the passive block mirrors no one, and we develop a refined vote-counting methodology that improves on the dominant approach in the literature. Although we do not endorse any particular reform, our findings indicate that market mirroring is the least disruptive and most neutral of the mirroring rules we study.