The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Mon, 04 May 2026 18:46:31 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png The Parallel Universes of Institutional Investing and Institutional Voting – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 The Parallel Universes of Institutional Investing and Institutional Voting https://corpgov.law.harvard.edu/2010/04/06/the-parallel-universes-of-institutional-investing-and-institutional-voting/?utm_source=rss&utm_medium=rss&utm_campaign=the-parallel-universes-of-institutional-investing-and-institutional-voting https://corpgov.law.harvard.edu/2010/04/06/the-parallel-universes-of-institutional-investing-and-institutional-voting/#comments Tue, 06 Apr 2010 13:01:53 +0000 http://blogs.law.harvard.edu/corpgov/?p=8357?d=20150120102914EST Posted by Charles M. Nathan, Latham & Watkins LLP, on Tuesday, April 6, 2010
Editor's Note:

Charles Nathan is Of Counsel at Latham & Watkins LLP and is co-chair of the firm’s Corporate Governance Task Force. This post is based on a Latham & Watkins Corporate Governance Commentary by Mr. Nathan and Parul Mehta.

The Dichotomy between Institutional Investing and Institutional Voting

Over the past 30 years, institutional investing and institutional voting of portfolio shares have separated to the point that in most institutions the persons charged with making investment decisions have relatively little or no responsibility for voting the institution’s portfolio shares. While this is not universally the case, it is by far the prevailing paradigm. It has become rare for those charged with making investment decisions to buy or sell stock also to be important players in the share voting process. [1]

The reasons for the divorce of investing and voting at institutional investors are:

  • The law of large numbers (too many portfolio companies with too many ballot votes at annual shareholder meetings), and
  • Two seminal decisions by government agencies that regulate our institutional investor community — the US Securities and Exchange Commission (SEC) and the US Department of Labor in its administration of ERISA.

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