Governance Matters: The Proof Is in the Proxy
Our research shows a correlation between strong governance and higher stock returns. Investors have long theorized that companies with poor corporate governance practices may be more prone to mismanagement and weak returns. To investigate further, we’ve looked inward to a key data source: our proxy votes. Specifically, we draw a correlation example between governance and […]
Bob Herr is Senior Vice President and Director of Corporate Governance on the Responsibility team and Ryan Oden is a Research Analyst for US Growth Equities at AllianceBernstein. This post is based on their AllianceBernstein memorandum.
Our research shows a correlation between strong governance and higher stock returns.
Investors have long theorized that companies with poor corporate governance practices may be more prone to mismanagement and weak returns. To investigate further, we’ve looked inward to a key data source: our proxy votes.
Specifically, we draw a correlation example between governance and returns through AllianceBernstein’s (AB’s) proxy-voting track record in recent years. We think proxy voting is one of the most expressive tools investors can use to communicate a view on the quality of a firm’s governance, providing that it’s based on careful analysis and accountability, not a rubber stamp.
Specifically, leveraging proxy voting and direct engagement* with companies can help to improve them, ideally resulting in better long-term outcomes. Several studies, which include our own findings, have made this connection much more apparent.
