The New Separation of Ownership and Control: Institutional Investors and ESG

By Paul G. Mahoney and Julia D. Mahoney April 20, 2021 by renholding

In recent weeks, the Securities and Exchange Commission (SEC) has devoted considerable attention to environmental, social and governance, or ESG, matters. It has requested public comment on climate disclosure proposals, appointed a senior policy advisor for climate and ESG, and …

Why Would Passive Funds Invest in Corporate Governance?

By Henry Friedman and Lucas Mahieux February 9, 2021 by renholding

The Big Three passive fund managers (BlackRock, State Street, and Vanguard) have roughly quadrupled their collective ownership stake in S&P 500 companies over the past two decades (Hirst and Bebchuk, 2019). This enormous increase in ownership by passively …

The Role of Institutional Investors in Stakeholder Capitalism

By Giovanni Strampelli December 18, 2020 by renholding

Institutional investors are increasingly playing a major role in the shift toward stakeholder capitalism. They are also facing pressure from their clients and others to focus more on ensuring that their investments promote corporate sustainability. Such expectations are reinforced by …

The Push Towards Corporate Guidelines

By Asaf Eckstein November 10, 2020 by renholding

In recent years, there has been a debate in the corporate world about the capabilities and incentives of institutional investors to invest in corporate stewardship – defined as monitoring, voting, and engagement – of their portfolio companies. The main focus …

The Role of Institutional Investor Regulation in Restoring a Fair, Sustainable Economy

By Leo E. Strine, Jr. October 27, 2020 by renholding

In a new essay, available here, I discuss the essential but insufficient role of regulation to promote more effective stewardship by institutional investors. My essay offers a frame for specific policy recommendations that align the responsibilities of institutional investors …

Corporate Governance in the Presence of Active and Passive Delegated Investment

By Adrian Aycan Corum, Andrey Malenko and Nadya Malenko October 9, 2020 by renholding

Institutional ownership has grown tremendously over recent decades, rising to more than 70 percent of U.S. public firms. The composition of institutional ownership has also changed, with a remarkable growth in passive funds: The fraction of equity mutual fund assets …

ESG, Common Ownership, and Systematic Risk: How They Intersect

By John C. Coffee, Jr. September 14, 2020 by renholding

This brief column will assert that three developments that seem unrelated are in fact closely related and may soon impact U.S. corporate governance with the force of a freight train. This column summarizes a longer article just posted by this …

The Politics of Institutional Shareholder Voting: Transparency Before Reform

By Isabel Verkes August 13, 2020 by renholding

On July 22, the SEC finalized a sweeping rule change to enhance the transparency around the role of proxy advisers. This follows an earlier proposal to reform the process for including shareholder proposals in a company’s proxy statement.^[1] These …

Skadden Reviews ESG for First Half of 2020

By Scott C. Hopkins, Simon Toms, Adam M. Howard and Patrick Tsitsaros August 10, 2020 by renholding

Interest in the environmental, social and governance (ESG) policies of companies and their impact on the wider community has continued to increase amongst institutional investors, retail shareholders and the media during the first half of 2020. The COVID-19 pandemic and …

The New Civil Code: ISS and Glass Lewis as Lawmakers

By Neil Whoriskey July 28, 2020 by renholding

ISS and Glass Lewis have arrogated to themselves the power to make law, promulgating a civil code of astounding breadth and detail, ruling over decisions on board composition, director qualifications, term limits, majority voting standards, executive compensation, capital structure, poison …

Why the SEC’s Proposal to Amend Rule 13f-1 Should Fail

By Eduardo Gallardo July 27, 2020 by renholding

On July 10, the Securities and Exchange Commission (SEC) proposed a 35-fold increase – from $100 million to $3.5 billion – in the threshold for requiring institutional investment managers to publicly report their equity holdings on Form 13F.[1] This …

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 …

Can Institutional Investors Help the Market Evaluate Complex Legal Disputes?

By Paul Borochin, Xiaoqiong Wang and Siqi Wei March 6, 2020 by renholding

Do institutional investors have the ability to mitigate information asymmetries around complex corporate events? Securities class actions (SCA) are suitable for testing any informational advantage for institutional investors: The number of SCAs brought against U.S. firms has increased markedly in …

Mapping the Landscape of Comments to the SEC’s New Proxy Rules

By Jens Frankenreiter March 4, 2020 by renholding

In November 2019, the Securities and Exchange Commission (“SEC”) issued a notice of proposed rulemaking aimed at the roles played by proxy advisers in providing information and voting recommendations to clients. The move was preceded by substantively similar interpretive guidance …

Why the SEC Proposal to Regulate Proxy Advisors Is Flawed

By Ken Bertsch February 19, 2020 by renholding

[Editor’s Note: This and the piece that immediately follows offer a point/counterpoint on the SEC’s proxy advisor proposal.] The Council of Institutional Investors opposes the SEC’s proposal to create a new regulatory structure for proxy advisory firms.[1]…

The Results Are in: Global Investor-Director Survey on Climate Risk Management

By The Millstein Center and LeaderXXchange February 14, 2020 by renholding

Institutional investors are increasingly focused on “extra-financial performance” as a predictor of long-term success of companies. Topics like climate change, CO2 emissions reduction, respect for the environment, labour rights, and diversity are more and more factored into investment decisions.

Investors, …

CEO Networks and Shareholder Litigation

By William R. McCumber and Lingna Sun February 11, 2020 by renholding

Academics, notably in sociology and economics, have long understood that social settings are primary drivers of information transmission and economic outcomes, from hiring decisions to product adoption to resource allocation. However, only recently has there been large-sample empirical evidence to …

SEC Chair Clayton Addresses Proposed Order on Access to Equity Market Data

By Jay Clayton January 9, 2020 by renholding

Good morning. This is an open meeting of the U.S. Securities and Exchange Commission on January 8, 2020, under the Government in the Sunshine Act. The Commission today will consider a staff recommendation to issue for public comment a Proposed

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The Case for Institutional Investors’ Collective Engagements

By Giovanni Strampelli and Gaia Balp November 1, 2019 by renholding

Shareholder cooperation is on the rise as a tool for active corporate ownership and a way to effectively voice concerns about corporate governance and performance. While “wolf packs” of activist hedge funds that aim to bring about significant corporate change …