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Full-Text Articles in Business Law, Public Responsibility, and Ethics
Locked In: The Competitive Disadvantage Of Citizen Shareholders, Anne M. Tucker
Locked In: The Competitive Disadvantage Of Citizen Shareholders, Anne M. Tucker
Anne Tucker
In this Essay, I challenge the conventional corporate law wisdom that unhappy mutual fund investors paying high fees don’t need litigation or regulation to protect their interests because they should simply exit a fund and reinvest elsewhere. The exit solution, advanced by Professors John Morley and Quinn Curtis in Taking Exit Rights Seriously provided an elegantly simply solution to the problem of unhappy indirect investors (e.g., mutual fund investors) given that they are often low-dollar, low-incentive, rationally-apathetic investors facing enormous information asymmetries and collective action problems. According to their view, competition produced by exit, or the threat of exit, is …
Institutional Investing When Shareholders Are Not Supreme, Christopher Geczy, Jessica Jeffers, David Musto, Anne Tucker
Institutional Investing When Shareholders Are Not Supreme, Christopher Geczy, Jessica Jeffers, David Musto, Anne Tucker
Anne Tucker
Institutional investors, with trillions in assets under management, hold increasingly important stakes in public companies and fund individual retirement for many Americans, making institutional investors’ behaviors and preferences paramount determinants of capital allocations and the economy. In this paper, we examine high fiduciary duty institutions' (HFDIs') response to decreased profit maximization pressure as measured by the effect of constituency statutes on HFDI investment. We ask this question, in part, to anticipate HFDIs’ response to alternative purpose firms, like benefit corporations. Only with access to institutional investors’ capital can alternative purpose firms gain economic significance to rival the purely for-profit corporation. …