Thursday, July 13, 2017
Humanities LT G255 (University of Glasgow)
Since the 1980s, formal and informal regulatory changes have increasingly pushed Anglo-Saxon pension funds to consider shareholder engagement as their fiduciary responsibility. Who promoted these changes, and why? While the existing literature has highlighted trade unions’ and some pension fund administrators’ role in spearheading shareholder activism by specific pension funds in the 1970s and 1980s, this paper shows how, roughly at the same time, a number of British and American regulators acted on their own initiative and started reshaping their domestic regulatory frameworks so as to make shareholder engagement a fiduciary responsibility of all, not just a few, pension funds. These regulators’ agenda for change was motivated by the idea that pension funds should hold equities for the long term and should challenge investee companies’ poor performance through “voice” rather than through “exit”. The argument is illustrated with case studies of US and UK corporate governance debates since the 1970s.
