Sky Blog
The extraordinary rise of China’s economy has made understanding Chinese corporate governance an issue of global importance. A rich literature has developed analyzing the Chinese Communist Party’s (CCP’s) role as China’s largest controlling shareholder and the impact that this has …
American workers are more productive than ever, but they take home the same pay they did 40 years ago. While firms have enjoyed blockbuster profits—and the U.S. gross domestic product has tripled—most American households have not shared in this increasing …
In recent years, institutional investors have publicly voiced their support for firms’ corporate social responsibility (CSR) activities. Most notably, Larry Fink, the CEO of BlackRock— the largest institutional investor in the world, with over $7 trillion in assets under management—sent …
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 …
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 …
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 …
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 …
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 …
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 …
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 …
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 …
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 …
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 …
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 …
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 …
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 …
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 …
[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]…
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, …
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 …