The new regulation that Security and Exchange Commissioners voted in November doesn’t fix proxy advisory industry duopoly problems, but it actually makes them worse: A group of scholars from major American universities filed a comment to ask the SEC to amend the proposed reform of public companies corporate governance.  




On November 5, the Securities and Exchange Commission proposed new rules on how proxy advisory firms can advise shareholders on how to vote. The new regulation will also impact how shareholders can have their proposals on the ballots.


Investors who lack time and money to get direct information on the company they own shares in usually hire proxy advisory firms that make recommendations about how shareholders should vote. With the new rules, proxy advisors will have less room for maneuver, and voting against managements’ preferences will be much more difficult and expensive. Firms recommending a vote against executives will have to disclose the methodology of their analysis to companies’ management and will be exposed to a risk of federal litigation if the executives do not consider the methodology appropriate.


In the last two months, ProMarket has published a series of articles on the proposed reform, as well as an episode of Capitalisn’t, the podcast hosted by Luigi Zingales and Kate Waldock. The Stigler Center also organized an event to discuss the potential impact of new SEC regulation with Chicago Booth professor Steven Kaplan and Nell Minow, Vice Chair of ValueEdge Advisors, moderated by Zingales, the Stigler Center’s faculty director and one of the editors of this blog. You can watch the full video of the event here.


On January 15, a group of over 60 leading finance professors from major American universities filed the following comment to the SEC to ask a revision of the proposed draft regulation:  


Dear Chairman Clayton and Members of the Commission:


We share the Commission’s concerns about concentration in the proxy advisory market. Yet, we disagree with the following proposed remedies: 1) forcing proxy advisors to share their opinions with managers ahead of time and  2) treating opinions on proxies as proxy solicitations. By increasing the cost of opining on proxy statements such proposals will only discourage new entry into the proxy advisory market and exacerbate the problem of market concentration in this sector.


We ask the Commission to strike these proposed changes.



Viral Acharya

C.V. Starr Professor of Economics

Leonard N. Stern School of Business, New York University



Anat Admati

George G.C. Parker Professor of Finance and Economics

Stanford Graduate School of Business



Rui Albuquerque

Associate Professor of Finance

Boston College



Michal Barzuza

Nicholas E. Chimicles Research Professor of Business Law and Regulation




Lucian Bebchuk

James Barr Ames Professor of Law, Economics, and Finance

Harvard Law School



Marianne Bertrand

Chris P. Dialynas Distinguished Service Professor Of Economics

The University of Chicago Booth School of Business



Bernard Black

Nicholas J. Chabraja Professor

Northwestern University Law School and Kellogg School of Management Law School



Margaret Blair

Milton R. Underwood Chair in Free Enterprise

Vanderbilt University Law School



Patrick Bolton

Barbara and David Zalaznick Professor of Business

Columbia Business School



Richard Booth

Martin G. McGuinn Chair in Business Law

Villanova University Charles Widger School of Law



William Bratton

Nicholas F. Gallicchio Professor of Law and Co-Director, Institute for Law & Economics

University of Pennsylvania Law School



Alon Brav

Peterjohn-Richards Professor of Finance

Fuqua School of Business



Ryan Bubb

Professor of Law

NYU School of Law



John Coffee

Adolf A. Berle Professor of Law

Columbia Law School



Robert Daines

Pritzker Professor of Law and Business

Stanford Law School



Mark DeFond

A.N. Mosich Chair of Accounting, Associate Dean of Faculty

University of Southern California



Espen Eckbo

Tuck Centennial Professor of Finance

Tuck School of Business at Dartmouth



Andrew Ellul

Professor of Finance and Fred T. Greene Chair in Finance

Kelley School of Business, Indiana University



Isil Erel

David A. Rismiller Chair in Finance

Ohio State University



Mara Faccio

Hanna Chair in Entrepreneurship & Associate Professor of Finance

Purdue University – Krannert School of Management



Allen Ferrell

Harvey Greenfield Professor of Securities Law

Harvard Law School



Jill Fisch

Perry Golkin Professor of Law, Co-Director, Institute for Law and Economics

University of Pennsylvania Law School



Vyacheslav Fos

Associate Professor of Finance and Hillenbrand Family Faculty Fellow

Boston College



Paolo Fulghieri

Professor of Finance

University of North Carolina



Martin Gelter

Professor of Law

Fordham University School of Law



Ronald Gilson

Charles J. Meyers Professor of Law and Business

Stanford Law School



Eitan Goldman

Associate Professor of Finance

Kelley School of Business, Indiana University



Todd Gormley

Associate Professor of Finance

Washington University in St. Louis



Diane Guercio

Gerry and Marilyn Cameron Professor of Finance

University of Oregon



Dirk Hackbarth

Professor of Finance

Boston University



Oliver Hart

Andrew E. Furer Professor of Economics

Department of Economics, Harvard University



Michael Jensen

Jesse Isidor Straus Professor of Business Administration, Emeritus

Graduate School of Business Administration, Harvard University



Wei Jiang

Arthur F. Burns Professor of Free and Competitive Enterprise

Columbia Business School



Kathryn Judge


Columbia Law School



Marcel Kahan

George T. Lowy Professor of Law

New York University School of Law



Reinier Kraakman

Ezra Ripley Thayer Professor of Law

Harvard Law School



Christian Leuz

Sondheimer Professor of International Economics, Finance, and Accounting

The University of Chicago Booth School of Business



Jonathan Macey

Sam Harris Professor of Corporate Law, Securities Law and Corporate Finance

Yale Law School



Nadya Malenko

Associate Professor of Finance

Boston College



Antonio Mello

Aschenbrener Fellow and Associate Professor of Finance

University of Wisconsin – Madison – School of Business



Andrew Metrick

Professor of Finance

Yale School of Management



Curtis Milhaupt

Professor of Law

Stanford Law School



Frank Partnoy

George E. Barrett Professor of Law and Finance

University of San Diego



Paul Pfleiderer

The C.O.G. Miller Distinguished Professor of Finance

Stanford Graduate School of Business



Katharina Pistor

Michael I. Sovern Professor of Law

Columbia Law School



Annette Poulsen

Sterne Professor of Banking and Finance

University of Georgia



Morgan Ricks


Vanderbilt University Law School



Mark Roe

David Burg Professor of Law

Harvard Law School



Ailsa Roell

Professor of International and Public Affairs

Columbia University



Joshua Ronen

Professor of Accounting

Stern School of Business, NYU



Paola Sapienza

Professor of Finance

Kellogg School of Management



Frederik Schlingemann

Professor of Finance

Joseph M. Katz Graduate School of Business, University of Pittsburgh



Antoinette Schoar

Michael Koerner ’49 Professor of Entrepreneurial Finance

MIT Sloan School of Management



Simone Sepe

Professor of Law and Finance

The University of Arizona; IAST – Toulouse School of Economics



Amit Seru

The Steven and Roberta Denning Professor of Finance

Stanford Graduate School of Business



David Skeel

Samuel Arsht Professor of Corporate Law

University of Pennsylvania – School of Law



Holger Spamann

Professor of Law

Harvard Law School



Laura Starks

Seay Regents Chair of Finance

McCombs School of Business



Randall Thomas

John S. Beasley Professor of Law and Business

Vanderbilt University Law School and Owen School of Management



Michael Weisbach

The Ralph W. Kurtz Chair in Finance

The Ohio State University



David Yermack

Chairman, Finance Department, Stern School of Business

New York University



Luigi Zingales

Robert C. McCormack Professor of Entrepreneurship and Finance

The University of Chicago Booth School of Business


The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. The posts represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty. For more information, please visit ProMarket Blog Policy.