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Full-Text Articles in Law
Shareholder Value(S): Index Fund Esg Activism And The New Millennial Corporate Governance, David H. Webber, Michal Barzuza, Quinn Curtis
Shareholder Value(S): Index Fund Esg Activism And The New Millennial Corporate Governance, David H. Webber, Michal Barzuza, Quinn Curtis
Faculty Scholarship
Major index fund operators have been criticized as ineffective stewards of the firms in which they are now the largest shareholders. While scholars debate whether this passivity is a serious problem, index funds’ generally docile approach to ownership is broadly acknowledged.
However, this Article argues that the notion that index funds are passive owners overlooks an important dimension in which index funds have demonstrated outspoken, confrontational, and effective stewardship. Specifically, we document that index funds have taken a leading role in challenging management and voting
against directors in order to advance board diversity and corporate sustainability. We show that index …
Corporate Governance By Index Exclusion, Scott Hirst, Kobi Kastiel
Corporate Governance By Index Exclusion, Scott Hirst, Kobi Kastiel
Faculty Scholarship
Investors have long been unhappy with certain governance arrangements adopted by companies undertaking initial public offerings, such as dual-class voting structures. Traditional sources of corporate governance rules—the Securities and Exchange Commission, state law, and exchange listing rules—do not constrain these arrangements. As a result, investors have turned to a new source of governance rules: index providers.
This Article provides a comprehensive analysis of index exclusion rules and their likely effects on insiders’ decision-making. We show that efforts to portray index providers as the new sheriffs of the U.S. capital markets are overstated. Index providers face complex and conflicting interests, which …