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These mutual funds and ETFs actively participate in corporate governance, and the overlapping ownership of most stocks in the market is a very underrated proble
by prickledpear 8y ago
These mutual funds and ETFs actively participate in corporate governance, and the overlapping ownership of most stocks in the market is a very underrated problem.
Economists have found evidence that as ownership concentration increases, firms act more like a monopoly.
See this paper for one example in the airline industry: https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.12698 https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.12698
- nebolo 8y agoParticipating in corporate governance and actively forming corporate strategy is a very different issue. And to my knowledge, ETFs and mutual funds do not participate in any meaningful way in management, i.e. they do not act as activist investors.
- jasode 8y ago>And to my knowledge, ETFs and mutual funds do not participate in any meaningful way in management, i.e. they do not act as activist investors. There's been a trend towards more activism with passive indexes. One example with Blackrock's passive fund: https://www.afr.com/business/larry-fink-says-blackrock-will-take-activism-to-a-whole-new-level-20171031-gzc2lt https://www.afr.com/business/larry-fink-says-blackrock-will-...