Here Come those Doggoned "Activist" Pension Funds
Reading this online at Pensions & Investments:
U.S. institutional investor ownership of the U.S. equity market rose to 59.2%, or $7.9 trillion, of outstanding U.S. equities in 2003, up of from 51.8%, or $6.6 trillion, in 1999, according to the latest data in The Conference Board’s Institutional Investment Report of U.S. institutional investor ownership and control.
. . .
“Activist public pension funds continue to amass relatively more control over companies,” a Conference Board statement said. Their public pension funds’ownership of total equities rose to 9.7% in 2003 from 7.6% in 2000, the report said.
. . .
"This means that, despite a brief hiatus, the economic power and clout of U.S. institutional investors continues," Carolyn Kay Brancato, director of The Conference Board's Global Corporate Governance Research Center, said in a statement. "These investors tend to be the most activist in demanding corporate governance reforms and will continue to have a profound impact on every company not only in the U.S. but also in global markets, since U.S. investors have tended to be out in front of global shareholder activism."
reminded me of this bit, which I read while riding the bus this morning, from William Greider's The Soul of Capitalism:
Pension funds, it is argued, must become active investors who pressure and punish copanies for their deleterious practices, not as a gestrue of social conscience, but because the corporate antisocial behavior damages a pension fund's own wealth. . .
The individual company improves its profits by "externalizing".. costs, and so these actions are accepted practice in American management. But the costs will be paid by someone and thus injure the growth and efficiency of the broader economy in which the pension fund is invested.
. . .
This new concept - understanding pension funds as the "universal owner" of America's major business corporations - provides an economic rationale, unsentimental and self-interested, for why the funds should enforce social objectives; that is, they should punish corporations for irresponsible behavior by moving their capital elsewhere. The discipline would be exercised through the stock market. The wealthy enforcers simply would be fulfilling their fiduciary duties to their beneficial owners.
Speaking of the "soul of capitalism," John Bogle has a new book out. It's called The Battle for the Soul of Capitalism, and Publisher's Weekly blurbs it as a "worthy jeremiad against corporate excess."