Proxy advisory firms (PAs) have become a powerful force in American corporate governance. These firms counsel pension plans, mutual funds, and other institutional investors about how to vote the shares of corporations they own. They have built their businesses, in large part, on demand generated by regulatory requirements and expansive staff interpretations of those requirements. This policy brief outlines the regulations that give PAs their power and the nature and adverse consequences of that power, and offers suggestions for reforms.
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