27-11-2016, 10:55 PM
http://www.straitstimes.com/opinion/the-...er-clinton
Those cheering the arrival of activist shareholder might want to take note:
Those cheering the arrival of activist shareholder might want to take note:
Quote:The power of institutional investors to extract value has increased lopsidedly because US financial regulations were substantially revised in the 1980s and the early 1990s towards strengthening their power. US regulators were heavily influenced by the rhetoric of institutional activism and, ignoring the reality of the rapidly growing power of institutional investors, treated them as weak "minority shareholders" who should be allowed to act together to challenge "autocratic corporate management".
Currently, activist hedge funds are an investor group that exploits this gap between financial regulations and the actual power most effectively for their own profit. Buying a small fraction of outstanding corporate shares, they criticise incumbent management and request restructuring and cash disbursement to shareholders. More often than not, other institutional investors and proxy advisory firms support their claims. "Wolf pact attacks" and "co-investments" have rapidly become a convention in the US stock market. It is worthwhile to note the fact that the acceleration of predatory value extraction from US corporations coincided with the rise of hedge-fund activism in the middle of the 2000s.