RETAIL INVESTORS left out of
VOTING ADVANCES on research by
JILL FISCH
Perry Golkin Professor of Law Co-Director of the Institute for Law and Economics
“If shareholders do not vote in an informed manner, they may not maximize firm value through their voting decisions.”
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Shareholder voting allows investors to influence corporate policy on everything from operations to executive compensation, but the mechanics of voting are different for different types of investors. Institutional investors, such as banks, insurance companies, and pension funds, have access to data and technology that let them vote more easily than retail investors — individuals who purchase shares through their own personal accounts. That discrepancy translates to more influence for institutional investors than individual investors. But a new article by Penn Law’s Jill Fisch argues that more attention should be paid to retail investors — particularly to mechanisms that would allow them to vote more efficiently while becoming better informed. Institutional investors have access to third-party services to vote their stock easily and inexpensively, Fisch explains in her article “Standing Voting Instructions: Empowering the Excluded Retail Investor,” which is forthcoming in the Minnesota Law Review. Yet retail investors don’t have access to those same innovations, which is part of the reason why retail investors vote less than 30 percent of their shares, despite owning around 30 percent of the stock of publicly traded companies.
