Mirror Voting Can Prevent Index Funds From Undermining U.S. Stock Markets

By Jonathan R. Macey January 20, 2026 by renholding

America’s capital markets are the envy of the world but face an existential threat from the meteoric rise of index funds. The problem is a growing erosion of corporate accountability. Last month, President Trump took a first pass at this …

Are the Big Three Asset Managers Beneficial Stewards or Corporate Overlords?

By Ruth V. Aguilera, Kurt A. Desender and Mónica LópezPuertas-Lamy August 6, 2024 by renholding

In the corporate governance landscape, the influence of passive index funds and common ownership has become a focus of scholarly and public debate. As the largest asset management firms in the world, the Big Three (BlackRock, Vanguard, and State Street …

Giant Asset Managers, the Big Three, and Index Investing

By Dorothy S. Lund and Adriana Z. Robertson April 13, 2023 by renholding

Within the world of corporate governance, there has hardly been a more important recent development than the rise of the Big Three asset managers — Vanguard, State Street Global Advisors, and BlackRock. Due to the popularity of index funds and …

Why Passive Investors Care About Audit Quality

By Ting Dong, Florian Eugster and Antonio Vazquez January 19, 2023 by renholding

In recent decades, the rise of index funds (or passive investors), has caused heated debates over the efficacy of their stewardship role in corporate governance. Passive owners cannot influence the governance of a firm by selling its stock because the …

What the Rise of Indexing Means for Corporate Governance

By Alon Brav, Andrey Malenko and Nadya Malenko December 12, 2022 by renholding

The amount of assets that passive (index) funds have under management has grown significantly in recent decades. Domestic passive funds and ETFs now manage more than half of all assets under management (AUM) of domestic equity mutual funds and ETFs, …

Prosocial Antitrust

By Amelia Miazad March 25, 2021 by renholding

Recent developments have placed antitrust law on a collision course with corporate purpose. In a new paper, I reveal the unforeseen negative impacts of this conflict and provide a roadmap for avoiding them.

Businesses and investors are increasingly embracing …

The Index-Fund Dilemma: An Empirical Study of the Lending-Voting Tradeoff

By Edwin Hu, Joshua Mitts and Haley Sylvester January 19, 2021 by renholding

The future of corporate stewardship – and therefore corporate governance – rests in the hands of a few large institutional investors.[1] Questions of whether these funds have the necessary incentives to pursue stewardship have set off an explosion of …

Passive Exit

By Joshua Mitts January 6, 2021 by renholding

Economist Albert O. Hirschman (1970) classically set out the two alternatives facing dissatisfied members of an organization: They can voice displeasure or exit for greener pastures. Hirschman’s model has long explained the tradeoff facing shareholders of a poorly governed firm: …

Environmental and Social Voting at the Big Three

By Caleb N. Griffin June 16, 2020 by renholding

Environmental and social (E&S) issues are an increasingly publicized component of investment management. Large fund families, including the “Big Three” of Vanguard, BlackRock, and State Street, market themselves as advocates for the environment, women, workers in developing countries, and other …

The Conundrum of Common Ownership

By Jennifer G. Hill June 11, 2020 by renholding

My forthcoming article, “The Conundrum of Common Ownership,” examines the phenomenon of common ownership through a corporate governance lens. The common ownership debate has become one of the most contentious in corporate law. It is a by-product of …

Commissioner Peirce Speaks to SEC Investor Advisory Committee

By Hester M. Peirce May 26, 2020 by renholding

Thank you Anne [Sheehan] and other members of the committee for arranging an impressive list of panelists to share their views and perspectives on the important topics on today’s agenda. The committee has not let COVID-19 stop it from holding

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If Not the Index Funds, Then Who?

By Nathan Atkinson August 15, 2019 by renholding

In recent years, large asset managers have reached incredible sizes, managing trillions of dollars of assets on behalf of tens of millions of clients. The largest three – BlackRock, Vanguard, and State Street – taken together (the “Big Three”), vote …

Index Funds and the Cost of Engagement

By Patrick Jahnke June 17, 2019 by renholding

Institutional ownership of companies has grown to the point that institutions today own approximately 80 percent of the market value of U.S. stocks.[1] Recent academic research explores this rising ownership concentration and debates the growing importance of “passive” or “index” …

Where the Fisch, Hamdani, and Davidoff Solomon Theory of Passive Investors Goes Awry

By J.B. Heaton July 25, 2018 by renholding

President Reagan once said, “I’ve heard that hard work never killed anyone, but I say why take the chance?” In a recent paper, professors Jill Fisch, Assaf Hamdani, and Steven Davidoff Solomon (hereafter “FHDS”) argue that passive investors – …

Corporate Governance Consequences of Passive Investing

By Giovanni Strampelli July 19, 2018 by renholding

The popularity of index funds, which automatically track an index of stocks, is continuing to grow in the U.S, and, albeit less intensely, in the EU. Due to the high concentration of the index funds industry, the exponential rise of …

The Case Against Passive Shareholder Voting

By Dorothy Shapiro Lund August 2, 2017 by renholding

In the past few years, investors have begun to embrace the reality that academics have been championing for decades—that a broad-based passive indexing strategy is superior to picking individual stocks or actively managed mutual funds. As a result, millions of …

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