NEW: Shareholder Value(s): Index Fund ESG Activism and the New Millennial Corporate Governance examines the means by which large index fund managers in promote Environmental, Social, and Governance issues at major companies, presenting evidence that contrary to perceptions of index funds as remaining silent corporate governance issues, fund managers aggressively press companies to address ESG concerns, especially board diversity and climate change by withholding votes from directors in uncontested elections.
Former Chief Justice of the Delaware Supreme Court Leo E. Strine, Jr. offers policy recommendations intended to align the responsibilities of institutional investors with the best interests of investors and stakeholders in sustainable wealth creation and environmental responsibility in The Central Role of Institutional Investor Regulation in Restoring a Fair and Sustainable American Economy.
Corporate Governance Through Exit and Voice presents empirical evidence from the private engagements of a large active UK asset manager suggesting that asset manager derived benefits from monitoring portfolio companies and investment in stewardship, contrary to academic arguments that index funds have little incentive to monitor and engage with portfolio companies.
Reversing the Fortunes of Active Funds observes that passive funds recently surpassed active funds in total assets under management, noting that active funds participate in and bear the costs of monitoring portfolio companies but passive funds to not, the trend will tend to reduce monitoring, and proposes the use of tax mechanisms to help defray active funds’ monitoring costs.
BlackRock founder Barbara Novick spoke at the Harvard Law School Program on Corporate Governance on index fund managers’ corporate stewardship, responding to academic arguments that funds exert too much or too little influence over portfolio companies. Video of Barbara Novick Keynote Presentation.
Tulane’s professor Ann Lipton discusses current academic disputes regarding index funds’ incentives to participate in the governance of their portfolio companies, and consequences of concentrated stock ownership by mutual funds in Index Funds in Corporate Governance: Once More Unto the Breach.
Asset Management, Index Funds, and Theories of Corporate Control challenges recent academic articles that argue index funds exert too much, or, conversely, too little, but in either case, socially sub-optimal influence over portfolio companies, as ungrounded in the realities of the asset management business.
Index Funds and the Future of Corporate Governance: Theory, Evidence, and Policy examines how index fund managers monitor, vote, and engage with portfolio companies, and expected impact of concentrated index fund ownership on corporate governance and performance, and the economy.