4.4.0 Introduction

In this section, we explore the possiblity that institutional investors, upon receiving a proxy voting recommendation, conduct their own analysis and then reach the same conclusion as their proxy advisor most of the time. As a first step, we determine whether the funds reach the same conclusion as their proxy advisor most of the time (section 4.1). As a next step, we determine whether there is variation in the funds' propensity to deviate from proxy voting recommendations. We do this by exploring the relationship between the funds' propensity to deviate and variables that are likely to have an impact on portfolio performance. Thus, we look at size of stake (section 4.2), proposal type (section 4.3) and firm performance (section 4.4). We find that funds' propensity to deviate varies across each of these variables. Because we only look at the variables in isolation, we cannot exclude the possibility that the results reported are driven by other variables; indeed, as further explained below, the variables that we examine are likely to interact. This warrants caution in interpreting the results.