Empirical Evidence on the Role of Proxy Advisors in European Capital Markets

Joerg Markus Hitz, Nico Lehmann*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

19 Citations (Scopus)


Responding to regulators’ requests and filling a void in the academic literature, this paper provides comprehensive empirical evidence on the role of proxy advisors in 14 European countries. Exploiting coverage data and using content analysis of proxy voting reports by Institutional Shareholder Services and Glass Lewis, we provide descriptive analyses of proxy advisors’ firm coverage, the variation and determinants of voting recommendations, the relation between voting recommendations and shareholder voting at annual general meetings, and market reactions to the release of voting recommendations. Overall, our findings suggest an economically important role of proxy advisors in European markets. Throughout our analyses, we document that this role varies with governance- and ownership-related firm characteristics and with country-level measures of institutional strength.

Original languageEnglish
Pages (from-to)713-745
Number of pages33
JournalEuropean Accounting Review
Issue number4
Publication statusPublished - 8 Aug 2018

Bibliographical note

Funding Information:
We are grateful for valuable comments from David Veenman (the associate editor) and an anonymous reviewer, from Yuping Jia (discussant), Oksana Pryshchepa (discussant), Christophe Volont?, and participants at the 11th Workshop on Corporate Governance in St. Gallen, Switzerland (October 2014), the Annual Meeting of the European Accounting Association in Glasgow (April 2015), and the Annual Meeting of the European Financial Management Association in Breukelen/Amsterdam (June 2015). We thank Franziska Heusel, Marisa Rogge, Thorben Tiedemann, and Simon Wetterau for their excellent research assistance. We also thank Kristof Ho Tiu (Institutional Shareholder Services) and Carla Topino (Glass Lewis) for kindly providing data on ISS coverage and GL voting reports/GL coverage, respectively. All remaining errors are ours.

Publisher Copyright:
© 2017, © 2017 European Accounting Association.


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