Why do Investors Vote Against Corporate Directors?

Why do Investors Vote Against Corporate Directors?

Reena Aggarwal, Sandeep Dahiya, Umit Yilmaz

Series number :

Serial Number: 

Date posted :

July 20 2023

Last revised :

July 20 2023
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  • institutional investors • 
  • proxy voting • 
  • director elections • 
  • Board diversity • 
  • climate change

We analyze voting records for management proposals and find that investors today hold directors accountable for a much wider range of issues, such as climate change and board diversity, than in the past. Within environment, climate change is the only subcategory that is significantly associated with voting outcome.

Governance is an important driver of voting outcome, however, the newer and broader proxy for governance that we use has little in common with traditional measures used in the literature. Within governance, board diversity is significantly related to voting outcome. However, we find that social issues are not relevant for voting outcomes. Institutional investors have started providing rationale for why they voted against a particular director. The existence of such rationale related to board diversity, busyness, tenure, and independence result in more dissent votes. Female directors receive fewer dissent votes but not so if they are long-tenured. The mere presence of a shareholder proposal is associated with lower support for directors. This effect is driven by governance and not socially responsible proposals.


Real name:
Sandeep Dahiya
Real name:
Umit Yilmaz