Delegated Voters

Abstract

Asset managers have started delegating proxy voting rights from their centralized stewardship
groups to external fund managers and fund shareholders. Using a 2019 change in Vanguard’s
voting policy, we examine this delegation and find considerable disagreement between delegated
voters and Vanguard’s stewardship group. In particular, delegated voters are significantly less
likely to support management recommendations. Further, while some delegated voters rely on
proxy advisor recommendations in the presence of high information processing costs, more
become active voters. Finally, in contrast to some viewpoints, we find that delegated voters are
more likely to support shareholder ESG-related proposals than Vanguard’s stewardship group.