NEW YORK, March 19, 2026 /PRNewswire/ — Egan-Jones released an analysis examining structural conflicts of interest within the corporate governance and proxy advisory industry and outlining potential reforms to strengthen investor protections.
The report states that under current conditions, major corporations control significant portions of the proxy advisory infrastructure. In some cases, a single firm distributes proxy materials for issuers, advises issuers on how to structure materials to obtain shareholder support, advise investors on voting decisions, provides the platform for casting votes, tabulates vote results for issuers, and processes reports detailing how funds voted.
According to the analysis, these overlapping roles create fundamental conflicts of interest among market participants. Investors generally seek governance structures that ensure management serves shareholder interests effectively, while boards and management may prioritize compensation and reduced oversight. At the same time, service providers involved in proxy processing may seek to maximize fees and minimize operational friction.
The report notes that breakdowns within the current system occasionally surface but often remain hidden due to the relatively closed nature of the industry. It cites a 2023 Wall Street Journal article stating that “a new study by the American Council for Capital Formation shows Glass Lewis and ISS make material errors in their recommendations to investors.”
By comparison, the commentary highlights that the investment industry has implemented structural separation across key functions to reduce conflicts. For example, clearinghouses such as the Depository Trust Company do not operate as investment managers, stockbrokers or stock exchanges. Similarly, investment managers typically do not perform those other roles.
The analysis suggests that similar safeguards could be introduced within the corporate governance ecosystem. Structural separation of responsibilities could reduce conflicts of interest while improving transparency and accountability in shareholder voting.
The report concludes that although industry changes may require a transition period, the current structure provides limited comfort to investors and would benefit from a reorganization designed to strengthen oversight and reduce conflicts.
About Egan-Jones Proxy Services
Egan-Jones Proxy Services provides independent proxy-voting analysis, recommendations, and reporting for institutional investors.
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