Journal of Business Ethics

, Volume 116, Issue 2, pp 355-371

First online:

Compound Conflicts of Interest in the US Proxy System

  • Cynthia E. ClarkAffiliated withMcCallum School of Management, Bentley University Email author 
  • , Harry J. Van BurenIIIAffiliated withAnderson School of Management, University of New Mexico

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The current proxy voting system in the United States has become the subject of considerable controversy. Because institutional investment managers have the authority to vote their clients’ proxies, they have a fiduciary obligation to those clients. Frequently, in an attempt to fulfill that obligation, these institutional investors employ proxy advisory services to manage the thousands of votes they must cast. However, many proxy advisory services have conflicts of interest that inhibit their utility to those seeking to discharge their fiduciary duties. In this article, we describe the current proxy advisory network as an example of how current notions of conflicts of interest fall short when explaining the behavior of an interconnected set of market players whose remit is to act in the best interests of their investors. We discuss what participants in this system should do to bring transparency and accuracy to the proxy advice industry.


Conflicts of interest Fiduciary duty Governance ratings Proxy voting United States