CFJ Op-Ed: Securing Property Rights Means Reining In Proxy Advisors
- Ashley Baker
- Feb 20
- 2 min read
Committee for Justice Executive Director Ashley Baker has published a new op-ed in The National Law Review arguing that reining in dominant proxy advisory firms is not an act of regulatory overreach, but a necessary defense of property rights and fiduciary accountability.
The piece, titled “Protecting Property, Not Regulating Markets: Why Reining In Proxy Advisors Is Essential,” challenges the common assumption that any effort to discipline proxy advisors represents anti-market intervention. Instead, it contends that the current proxy advisory structure reflects a breakdown in the legal framework required for markets to function properly.
The Structural Problem
Institutional Shareholder Services (ISS) and Glass Lewis exercise significant influence over trillions of dollars in shareholder voting power. While defenders characterize this dominance as the product of market forces, the op-ed argues that the proxy advisory duopoly is insulated from normal competitive discipline.
In prior comments to the Securities and Exchange Commission, CFJ warned that proxy advisors operate outside the ordinary mechanisms of accountability that constrain most market participants. Retail investors have long expressed concern about “robo-voting” practices—where institutional investors automatically cast votes in alignment with advisory recommendations.
The op-ed explains that this dynamic creates a troubling divergence between fiduciary obligations and voting outcomes.
Property Rights and Fiduciary Duty
At its core, the op-ed frames the issue as one of property rights.
Corporate shares represent risk-assumption contracts, and the vote attached to those shares is an economic asset designed to protect investment value. It is not a political ballot. When proxy advisors systematically channel shareholder voting toward ideological or non-economic objectives, they risk diverting resources away from wealth maximization and toward political signaling.
The piece draws on law-and-economics scholarship—including Henry Manne’s view that “a corporation is not a small republic” and Robert Bork’s Consumer Welfare Standard—to argue that corporate governance must remain focused on economic output and investor returns.
When governance decisions are driven by non-economic metrics, the op-ed contends, both shareholder value and broader consumer welfare may suffer.
Austrian Economics and the Market Process
The op-ed also engages directly with Austrian economic theory to address libertarian hesitation about regulatory oversight.
Friedrich Hayek emphasized that markets require a carefully constructed legal framework to prevent fraud and enforce property rights. Israel Kirzner described markets as “discovery processes” dependent on accurate profit-and-loss signals.
When proxy advisory recommendations distort corporate decision-making away from economic performance and toward political criteria, they risk obscuring the price signals that guide entrepreneurial discovery.
Requiring proxy advisors to adhere to fiduciary and economic principles, the op-ed argues, is not an expansion of the administrative state. It is a restoration of the legal foundations necessary for markets to function.
A Defense of Market Institutions
The article concludes that properly enforcing property rights and fiduciary duties is not “statist interventionism.” It is a defense of capitalism itself.
Policing fraud, deception, and breaches of duty does not interfere with markets; it preserves them. Ensuring that proxy advisors act in the financial interest of investors helps align corporate governance with the economic purposes of the firm and the long-term welfare of shareholders.
CFJ will continue to advocate for policies that protect property rights, enforce fiduciary obligations, and preserve the legal framework necessary for competitive markets to thrive.
