scholarly journals Wolf Pack Activism

2021 ◽  
Author(s):  
Alon Brav ◽  
Amil Dasgupta ◽  
Richmond Mathews
Keyword(s):  
Corporate Governance ◽  
Target Management ◽  
Collective Influence ◽  
Asset Managers

Blockholder monitoring is central to corporate governance, but blockholders large enough to exercise significant unilateral influence are rare. Mechanisms that enable moderately sized blockholders to exert collective influence are therefore important. Existing theory suggests that engagement by moderately sized blockholders is unlikely, especially when the blocks are held by delegated asset managers who have limited skin in the game. We present a model in which multiple delegated blockholders engage target management in parallel, that is, “wolf pack activism.” Delegation reduces skin in the game, which decreases incentives for engagement. However, it also induces competition over investor capital (i.e., competition for flow). We show that this increases engagement incentives and helps ameliorate the problem of insufficient engagement, although it can also foster excess engagement. Under competition for flow, the total amount of capital seeking skilled activist managers is relevant to engagement incentives, which helps to predict when and where wolf packs arise. Flow incentives are particularly valuable in incentivizing engagement by packs with smaller members. This paper was accepted by Gustavo Manso, finance.

The Steinhoff signals: The role of responsible investing for asset managers

2020 ◽  
pp. 1-17
Author(s):  
Hendrik Jacobus Haasbroek ◽  
Geoff Bick ◽  
Stephanie Giamporcaro
Keyword(s):  
Corporate Governance ◽  
Boards Of Directors ◽  
Financial Analysis ◽  
Real Life ◽  
List Type ◽  
Responsible Investment ◽  
Teaching Case ◽  
Responsible Investing ◽  
Asset Managers

Subject area of the teaching case: The case can be used in the subject areas of finance and in particular investments, corporate governance, ESG, or responsible investments. It is suitable for students from all financial backgrounds, from a novice in the financial markets to an expert in finance. It is, however, expected that the class should have a sound fundamental grounding in financial analysis and valuations. The purpose of this case is to prepare students for future investments they would make in whatever capacity – whether in private or listed companies – and to prepare them for future roles on boards of directors. The examples of real-life events in this case study are used to prepare students for future similar situations in which they might find themselves. Student level: This teaching case is aimed at postgraduate students pursuing an MBA or a specialist Masters in a finance programme. This case can be used as a master class in corporate governance, investments, or responsible investments. This case is also suited for an executive education class in management. It is particularly relevant to a module that focusses on investments, corporate governance, ESG, or responsible investments. Brief overview of the teaching case: The case study chronicles meetings held on 8 November 2017 at a fictional South African asset manager, Active Investment Management (AIM). These meetings discuss the firm's investment in JSE-listed Steinhoff International Holdings. The case deals with the questions that active fund managers need to address when balancing financial analysis; environmental, social, and governance (ESG) analysis; portfolio management; and the need to comply with their fiduciary duty to clients. It also looks at the need for responsible investing in decision-making. Expected learning outcomes: The understanding of the assessment around the complexities of asset management when it comes to responsible investment. To determine why institutional investors should apply responsible investment principles when making investment decisions. An understanding of the evaluation of the unique roles of the three pillars of corporate governance, namely asset managers, auditors, and the board of directors. The ability to assess how to integrate financial analysis and ESG principles in making investment recommendations.

Institutional Investor Voting Behaviour

2021 ◽  
pp. 227-262
Author(s):  
Luca Enriques ◽  
Alessandro Romano
Keyword(s):  
Corporate Governance ◽  
Institutional Investors ◽  
Institutional Investor ◽  
Geographical Proximity ◽  
Voting Behaviour ◽  
Current Policy ◽  
Policy Issues ◽  
Common Ownership ◽  
Asset Managers ◽  
Shed Light

This chapter shows how network theory can improve our understanding of institutional investors’ voting behaviour and, more generally, their role in corporate governance. The standard idea is that institutional investors compete against each other on relative performance and hence might not cast informed votes, due to rational apathy and rational reticence. In other words, institutional investors have incentives to free-ride instead of ‘cooperating’ and casting informed votes. We show that connections of various kinds among institutional investors, whether from formal networks, geographical proximity, or common ownership, and among institutional investors and other agents, such as proxy advisors, contribute to shaping institutional investors’ incentives to vote ‘actively’. They also create intricate competition dynamics: competition takes place not only among institutional investors (and their asset managers) but also at the level of their employees and among ‘cliques’ of institutional investors. Employees, who strive for better jobs, are motivated to obtain more information on portfolio companies than may be strictly justified from their employer institution’s perspective, and to circulate it within their network. Cliques of institutional investors compete against each other. Because there are good reasons to believe that cliques of cooperators outperform cliques of non-cooperators, the network-level competition might increase the incentives of institutional investors to collect information. These dynamics can enhance institutional investors’ engagement in portfolio companies and also shed light on some current policy issues such as the antitrust effects of common ownership and mandatory disclosures of institutional investors’ voting.

scholarly journals Democracy in America at work: the history of labor’s vote in corporate governance

2019 ◽  
Author(s):  
Ewan McGaughey
Keyword(s):  
Corporate Governance ◽  
Listed Company ◽  
The United States ◽  
Pension Plans ◽  
Economic Democracy ◽  
Employee Representation ◽  
American Tradition ◽  
History Of ◽  
Democracy In America ◽  
Asset Managers

Can there be democracy in America at work? The historical division between democracy in politics and hierarchy in the economy is under strain. Hierarchical interests in the economy are shifting their model of power into politics, and yet a commitment to revive the law is resurgent. Central examples are the proposed Accountable Capitalism Act, Reward Work Act, Workplace Democracy Acts, and Employees’ Pension Security Acts. They would create a right for employees to elect 40% of directors on $1 billion company boards, a right for employees to elect one-third of directors on other listed company boards, and require one-half employee representation on single-employer pension plans. All challenge long held myths: that labor’s involvement in corporate governance is foreign to American tradition, that when codified in law labor voice is economically inefficient, that the legitimate way to have voice in the economy is by buying stocks, or that labor voice faces insurmountable legal obstacles. This article shows these myths are mistaken by exploring the history and evidence from 1861. The United States has one of the world’s strongest traditions of democracy at work. Economic democracy has not been more widespread primarily because it was suppressed by law. Americans favor voice at work, while asset managers who monopolize shareholder votes with ‘other people’s money’ enjoy no legitimacy at all. The article concludes that, even without federal government, and by recreating themselves as laboratories of democracy and enterprise, states can adapt the current proposals and rebuild a living law. (2019) 42 Seattle University Law Review 697.

Myanmar stock market needs time for success

2015 ◽  
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Economic Sanctions ◽  
Business Development ◽  
Secondary Market ◽  
Access To Finance ◽  
Content Type ◽  
Limited Access ◽  
Market Needs ◽  
Asset Managers

Significance Having a platform to raise capital and a secondary market in which to trade company shares should eventually help address one of the largest constraints on domestic business development in Myanmar: limited access to finance. Impacts To contribute meaningfully to YSX, US asset managers would need further relaxation of US economic sanctions on Myanmar. YSX could drive corporate governance improvement in Myanmar. It could also help to reduce corruption, especially in business tenders and procurement.

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