Work

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

Year: 2020

Type: article

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.

Source: Economy and Society

DOI: 10.1080/03085147.2020.1781417

Authors: Jan Fichtner, Eelke M. Heemskerk

Institution: University of Amsterdam

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Funders: European Commission, European Research Council

Awards: G1906215527, G434337789, G6696365644