Proxy Advisors in Europe : Reform Proposals and Regulatory Strategies

The rise of proxy advisors as powerful players in corporate governance has been increasingly catching the attention of lawmakers and legal scholars. This article analyses the reasons for the growing importance of the proxy advisory industry and outlines its market structure (I.). It then considers criticisms and concerns about proxy advisors, including allegations of conflicts of interest, a lack of transparency, faulty methodology and poor responsiveness to investor interests (II.). This is followed by a presentation of recent reform proposals on the European level, in France, Germany, the United Kingdom and the United States. (III.). Finally, this article concludes by pointing out similarities between proxy advisors and other informational intermediaries (credit rating agencies, auditors, compensation consultants, financial analysts) and reviewing potential regulatory strategies for proxy advisors (IV.)