Robo-Voting: Does Delegated Proxy Voting Pose a Challenge for Shareholder Democracy?

Robo-voting is the practice by an investment fund of mechanically voting in corporate elections according to the advice of its proxy advisor— in effect fully delegating its voting decision to its advisor. We examined over 65 million votes cast during the period 2008–2021 by 14,582 mutual funds to describe and quantify the prevalence of robo-voting. Overall, 33% of mutual funds robo-voted in 2021: 22% with ISS, 4% with Glass Lewis, and six percent with the recommendations of the issuer’s management. The fraction of funds that robo-voted increased until around 2013 and then stabilized at the current level.

Despite the sizable number of funds that robo-voted in recent corporate elections, robo-voters controlled only about 1.5% of shares on average because they tend to be smaller than other funds. Overall, the evidence suggests that robo-voting is more prevalent than its defenders suggest but may exert less influence on corporate governance than its critics suspect.