Prof. Yan Xiong has received Review of Corporate Financial Studies Rising Scholar Award for her paper “Information Bias in the Proxy Advisory Market” authored with Shichao Ma (University of Rochester). Congratulations!

The authors study an information-sale problem in which a monopolist proxy advisor sells recommendations to a firm's shareholders for corporate voting. They find that even an unconflicted proxy advisor skews its recommendations based on its clients' beliefs or preferences. The firm value is determined by a novel bias-quantity trade-off. Under some parameters, shareholders' biased beliefs or preferences can lead to more information purchases, which enhances their collective decision-making. Thus the firm value may increase despite the negative effects of biased proxy-voting recommendations.