Ep50 “Is Proxy Advising a Catch-22?” with Chester Spatt

If the purpose of a proxy advisory firm is to gather information and advise shareholders on how to vote, then how do the firms handle the many different goals and incentives each shareholder brings to the table? Where do the proxy advisory firms’ interests truly lie? In this episode, hosts and finance professors Jonathan Berk and Jules van Binsbergen speak with guest Chester Spatt, finance professor at Carnegie Mellon University and former Chief Economist at U.S. Securities and Exchange Commission, about the function and purpose of proxy advisory firms, such as Institutional Shareholder Services (ISS) and Glass Lewis. The conversation delves into the differing objectives and incentives among shareholders and how that complicates the work of a proxy advisory firm. They also discuss how and why proxy advisory firms may purposely foster close votes, and what could serve as better voting benchmarks. Find All Else Equal on the web: https://lauder.wharton.upenn.edu/allelse/ All Else Equal: Making Better Decisions Podcast is a production of the UPenn Wharton Lauder Institute through University FM.