Publications

@article{Fichter2019,

title = {The New Permanent Universal Owners: Index funds, patient capital, and the distinction between feeble and forceful stewardship},

author = {J Fichtner and E M Heemskerk},

url = {https://doi.org/10.1080/03085147.2020.1781417},

doi = {03085147.2020.1781417},

year  = {2020},

date = {2020-11-19},

journal = {Economy & Society},

volume = {49},

number = {4},

pages = {493-515},

abstract = {Fundamental change is happening in global finance – the shift from active management to index funds. This money mass-migration into index funds has far-reaching socio-economic consequences, as it has the potential to transform the nature of shareholder capitalism. We call BlackRock, Vanguard and State Street the ‘New Permanent Universal Owners’ that are invested indefinitely in thousands of firms. We provide novel findings on the combined ownership of the Big Three in European countries and Japan and investigate how this signals a shift away from the shareholder capitalism that has been dominant for the past three decades. We discuss the future role(s) of the New Permanent Universal Owners in corporate governance including whether they foster patient capital and introduce the distinction between feeble and forceful stewardship.},

keywords = {asset managers, corporate governance, corporate ownership, feeble, forceful, index funds, shorttermism, varieties of capitalism},

pubstate = {published},

tppubtype = {article}

}

@article{PetryFichtnerHeemskerk2019b,

title = {Steering capital: the growing private authority of index providers in the age of passive asset management},

author = {J Petry and J Fichtner and E M Heemskerk},

url = {https://www.tandfonline.com/doi/full/10.1080/09692290.2019.1699147},

doi = {https://doi.org/10.1080/09692290.2019.1699147},

year  = {2019},

date = {2019-12-10},

journal = {Review of International Political Economy},

abstract = {Since the global financial crisis, there is a massive shift of assets towards index funds. Rather than picking stocks, index funds replicate stock indices such as the S&P 500. But where do these indices actually come from? This paper analyzes the politico-economic role of index providers, a small group of highly profitable firms including MSCI, S&P DJI, and FTSE Russell, and develops a research agenda from an IPE perspective. We argue that these index providers have become actors that exercise growing private authority as they steer investments through the indices they create and maintain. While technical expertise is a precondition, their brand is the primary source of index provider authority, which is entrenched through network externalities. Rather than a purely technical exercise, constructing indices is inherently political. Which companies or countries are included into an index or excluded (i.e. receive investment in- or outflows) is based on criteria defined by index providers, thereby setting standards for corporate governance and investor access. Hence, in this new age of passive asset management index providers are becoming gatekeepers that exert de facto regulatory power and thus may have important effects on corporate governance and the economic policies of countries.},

keywords = {capital flows, index funds, index providers, passive asset management, private authority, stock market indices},

pubstate = {published},

tppubtype = {article}

}