Authors

Lorenia Lopez

Document Type

Perspective

Publication Title

Emory Corp. Governance & Accountability Rev. Perspectives

Publication Date

1-1-2016

Abstract

The purpose of this research is to evaluate the need for The Corporate Governance Reform and Transparency Act of 2016 (H.R. 5311). The study explains the nature of power in corporate board rooms to reveal the role of proxy advisory firms and highlight that two firms essentially control decisions in corporate board rooms. H.R. 5311 aims to protect investors by providing increased government oversight of publically-held companies through greater SEC regulation of these influential proxy advisors. The analysis highlights that the proxy-advisory market is highly monopolized, which results in unsubstantiated and often harmful voting recommendations. In sum, the current system disregards investor's expectations that their shareholder rights will not be weakened by conflicted third party advisors whose recommendations influence institutional investor voting patterns, and thus guide board room decisions. This work increases our understanding of the proxy advisory market, and calls attention to an overwhelming need for more effective corporate governance in this area.

First Page

1005

Volume

4

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