New research from the American Council for Capital Formation identifies a troubling number of assets mangers that are automatically voting in alignment with proxy advisor recommendations, in a practice known as “robo-voting.” This trend has helped facilitate a situation in which proxy firms are able to operate as quasi-regulators of America’s public companies, despite lacking any statutory authority.

While some of the largest institutional investors expend significant resources to evaluate both management and shareholder proposals, many others fail to conduct proper oversight of their proxy voting decisions, instead outsourcing decisions to proxy advisors. We reviewed those asset managers that historically vote in line with the largest proxy firm, Institutional Shareholder Services (ISS), finding 175 entities, representing more than $5 trillion in assets under management, that follow the advisory firm over 95% of the time.

(more…)