Since 2008, a massive shift has occurred from active towards passive investment strategies. This burgeoning passive index fund industry is dominated by BlackRock, Vanguard, and State Street, which we call the ‘Big Three’. In a new working paper CORPNET shows that already in 40 percent of all listed U.S. corporations the Big Three together constitute the largest shareholder — and even in 88 percent of the S&P 500 firms. This re-concentration of ownership is unprecedented and unlike the earlier ascent of actively managed mutual funds, such as Fidelity, is likely here to stay.
In contrast to active funds, the Big Three hold illiquid and permanent ownership positions, which give them stronger incentives to actively influence corporations. An analysis of the voting records on shareholder meetings reveals that the Big Three indeed utilize coordinated voting strategies but generally vote with management, except at director (re-)elections. Private engagements with management represent an important channel through which the Big Three exert influence.
Moreover, BlackRock, Vanguard, and State Street are arguably exerting ‘hidden power’ because company executives are likely to internalize their objectives. Finally, we find indications that this development entails new forms of financial risk, including anticompetitive effects and investor herding.
Read the entire article here: http://ssrn.com/abstract=2798653
The 2008 financial collapse posed the biggest challenge to the global economy since the Great Depression. Unlike the 30’s the global economic governance system survived. A study of the University of Amsterdam explains how. The results are published in the journal `Global Networks’, Eelke Heemskerk, Meindert Fennema (UvA) and William K. Carroll (University of Victoria) show that global actors did not withdraw into their national business communities after the financial crisis. Instead of securing one’s particular (national) interest, as happened in the 1930’s, corporate elites sought consensus. At all costs a collapse of the world financial system had to be avoided.
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Who is steering fossil fuel extraction in Western Canada and what influence do they wield? These central questions are driving a six-year research and public engagement initiative, Mapping the Power of the Carbon-Extractive Corporate Resource Sector, with funding from the Social Sciences and Humanities Research Council (SSHRC). The project brings together researchers, civil society organizations and Indigenous participants to study the oil, gas and coal industries in British Columbia, Alberta and Saskatchewan. CORPNET is an international partner and co-investigator in the project.
Hosted by the University of Victoria, the partnership is jointly led by the university, the Canadian Centre for Policy Alternatives (BC and Saskatchewan offices) and the Parkland Institute at the University of Alberta. In addition to the $2.5-million SSHRC award, the project is also supported by $2 million in matching contributions. (Please see backgrounder for further details on funding contributions and participants.)
“We’ve seen a rapid acceleration of fossil fuel extraction in recent years,” says Dr. Bill Carroll, UVic professor of sociology and co-director of the partnership. “Yet our knowledge of the companies involved and how they influence decision-making about our publicly owned carbon resources is remarkably sparse.”
“Our research will help Canadians gain a clearer picture of who’s-who in this increasingly important sector of Canada’s economy,” says Shannon Daub, who co-directs the partnership on behalf of CCPA-BC.
The partnership’s work will focus in four key areas:
• A systematic mapping of how the carbon-extractive industry is organized—which companies are involved, who runs them, who owns them and how they connect to broader international corporate networks.
• Analysis of the sector’s influence on public debates and policy making—such as efforts to secure social license, and corporate links to governments, political parties, lobby groups and private foundations.
• Case studies of contentious “flashpoints”—such as the expansion or development of new mines, pipelines, oil fields or export facilities.
• Development of an open source, publicly accessible corporate database—along with a training program for citizens and civil society groups, many of whom will contribute and update data.
On September 1, 2015, the CORPNET group has started. A list of group members is available.