Project on Investment, Ownership, and Control
In the Modern Firm
The project will provide the first comprehensive analysis of the institutions emerging as owners in the newly fragmented world of equity finance.
Business enterprise has always depended upon providers of equity. The study of the sources of equity in the U.S. historically has focused on individual investors. More recent work has recognized the role of institutions, such as pension and mutual funds, in providing equity capital to modern firms.
The last decade, however, has witnessed an unprecedented fragmentation of economic and legal rights across a diverse group of new owners. Some of the largest institutional investors now think of themselves as “asset managers,” for whom equity in public corporations plays only a limited role in a broader investment portfolio. Other newly important institutional investors are styled as hedge funds. These funds vary in strategy from computerized high-speed trading to value investing, and have distinct approaches to participating in the governance of their portfolio companies.
Taken together, these developments have left academics and regulators alike with an inadequate understanding of the influence of these owners over the governance—and performance—of the modern corporation.
The project’s work will include:
A taxonomy and census of the diverse institutional investors now operating. Additional research will pursue a better understanding of how these institutions are governed, exploring the important differences in the incentives and investment objectives of these owners.
An objective, dynamic, and public collection of data describing the governance of U.S. public companies.
Sustained, informed conversations among the key participants in the development, deployment, and oversight of these newly evolving sources of capital to provide a forum for sharing their concerns over the implications of these developments for corporate governance.
Read about the 2012 conference