Rethinking Stewardship
- 23 October 2020
- •
- Online
The live stream of the event is available to watch on YouTube:
https://www.youtube.com/watch?v=mtMulZ9AOfE
About this event
The reconcentration of share ownership into the hands of a small number of institutional investors holding broadly diversified portfolios has led to calls for adoption of a particular corporate governance stance by these investors, “stewardship.” Indeed, many jurisdictions, following the lead of the UK, have adopted stewardship codes into their regulatory framework. “Stewardship” has generally been taken to mean engagement with portfolio companies in view of long term shareholder interests, though some have argued for a broader conception of stewardship obligations. Since companies are likely to be responsive to the convictions of their largest shareholders, one especially important question is how particular models of stewardship will affect the way that public companies frame and address the ESG issues now urged upon them.
The goal of the conference was to examine this conception of stewardship for its “fit” with current practices of institutional investors, the “products” that asset managers offer to beneficial owners, and the diverse patterns of ownership and economic development throughout the world. In short, the goal was to “Re-Think Stewardship.”
Prof. Lucian Bebchuk (Harvard Law School and ECGI) argued that a particularly important class of institutional investors, index funds, significantly underinvest in stewardship, and are excessively deferential to corporate managers, relative to what would best serve the interests of the funds’ beneficial investors.
Prof. Jeffrey Gordon (Columbia Law School and ECGI) presented an alternative conception of stewardship, “systematic stewardship,” appropriate for maximally diversified investors, based on the distinction in Modern Portfolio Theory between idiosyncratic and systematic risk. Thus institutional investors can take up issues like climate change, which affect the level of systematic risk, consistent with a finance rationale of trying to achieve the best risk-adjusted return for their investors.
Prof. Dionysia Katelouzou (King’s College London) presented the findings from her empirical analysis of the rhetoric of stewardship by activist hedge funds in the UK, which uses the novel method of automated content analysis, and she contended that we can learn a lot from the UK stewardship model especially when institutional investors dominate the public equity market. Prof. Dan Puchniak, (National University of Singapore) then contended that the relative weakness of institutional investors and dominance of controlling shareholders in non-Anglo-American jurisdictions makes the widespread transplant of UK-style stewardship codes a “global legal misfit” – resulting in stewardship functioning in diverse and unanticipated ways around the world.
Chief Justice (ret) Leo Strine (Delaware Supreme Court) delivered a keynote address that addressed stewardship both from the doctrinal perspective of a judge and a view of the role of institutional investors in promoting fair and sustainable capitalism.
The papers were discussed by panelists from globally significant asset managers, legal scholars and other researchers, and corporate governance practitioners.
Organisers
Ira M. Millstein Center for Global Markets and Corporate Ownership, Columbia Law School
European Corporate Governance Institute (ECGI)
Center for Law and Economic Studies, Columbia Law School
Programme
You can download the event programme here
Reading material can be downloaded here
Contact
Programme queries should be directed to Jeff Gordon (jgordon@law.columbia.edu)
Supported by:
Friday 23 October 2020 (EDT)
Welcome and introduction
Index Fund Stewardship | Lucian Bebchuk
Moderator:
Index Fund Stewardship | Lucian Bebchuk
Reading material
Bebchuk, Lucian A. and Hirst, Scott, Index Funds and the Future of Corporate Governance: Theory, Evidence, and Policy (May 31, 2019). Columbia Law Review, Vol. 119, December 2019, pp. 2029-2146, European Corporate Governance Institute (ECGI) - Law Working Paper No. 433/2018, Harvard Law School John M. Olin Center Discussion Paper No. 986, Available at SSRN: https://ssrn.com/abstract=3282794 or http://dx.doi.org/10.2139/ssrn.3282794.
Bebchuk, Lucian A. and Hirst, Scott, Index Funds and the Future of Corporate Governance: Presentation Slides (November 12, 2019). Available at SSRN: https://ssrn.com/abstract=3485678 or http://dx.doi.org/10.2139/ssrn.3485678.
Bebchuk, Lucian A. and Hirst, Scott, The Specter of the Giant Three (May 9, 2019). Boston University Law Review, Vol. 99, 2019, pp. 721-741, Harvard Law School John M. Olin Center Discussion Paper No. 1004, European Corporate Governance Institute (ECGI) - Finance Working Paper No. 608/2019, Available at SSRN: https://ssrn.com/abstract=3385501 or http://dx.doi.org/10.2139/ssrn.3385501.
Lund, Dorothy S., Passive Investing and Corporate Governance: A Law and Economics Analysis (June 9, 2020). Available at SSRN: https://ssrn.com/abstract=3623381 or http://dx.doi.org/10.2139/ssrn.3623381.
Lund, Dorothy S., The Case Against Passive Shareholder Voting (March 21, 2018). 43 Journal of Corporation Law 493 (2017) , University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 829, Available at SSRN: https://ssrn.com/abstract=2992046 or http://dx.doi.org/10.2139/ssrn.2992046.
Moderator
Panelists
Break
Systematic Stewardship | Jeff Gordon
Moderator:
Systematic Stewardship | Jeff Gordon
Presentation slides
Reading material
Gordon, Jeffrey N., Systematic Stewardship (Draft, October 20, 2020)
Gordon, Jeffrey N., Addressing Economic Insecurity: Why Social Insurance Is Better Than Corporate Governance Reform (August 21, 2019). CLS Blue Sky Blog. Available at: https://clsbluesky.law.columbia.edu/2019/08/21/addressing-economic-insecurity-why-social-insurance-is-better-than-corporate-governance-reform/.
Fisch, Jill E., The Uncertain Stewardship Potential of Index Funds (January 1, 2020). In, Global Shareholder Stewardship: Complexities, Challenges and Possibilities (Dionysia Katelouzou & Dan W. Puchniak eds, Cambridge University Press, Forthcoming), U of Penn, Inst for Law & Econ Research Paper No. 20-09, European Corporate Governance Institute - Law Working Paper No. 490/2020, Available at SSRN: https://ssrn.com/abstract=3525355 or http://dx.doi.org/10.2139/ssrn.3525355.
Barzuza, Michal and Curtis, Quinn and Webber, David H., Shareholder Value(s): Index Fund ESG Activism and the New Millennial Corporate Governance (August 19, 2019). 93 Southern California Law Review (Forthcoming 2020) , Available at SSRN: https://ssrn.com/abstract=3439516 or http://dx.doi.org/10.2139/ssrn.3439516.
Moderator
Panelists
Lunch break
Keynote: Stewardship 2021: The Centrality of Institutional Investor Regulation To Restoring a Fair and Sustainable American Economy | Leo E. Strine Jr.
Moderator:
Panelists:
Keynote: Stewardship 2021: The Centrality of Institutional Investor Regulation To Restoring a Fair and Sustainable American Economy | Leo E. Strine Jr.
Reading material
Strine, Leo E., Toward Fair and Sustainable Capitalism (August 2020). Roosevelt Institute. Available at: https://rooseveltinstitute.org/publications/toward-fair-and-sustainable-capitalism/
Strine, Leo E., Who Bleeds When the Wolves Bite? A Flesh-and-Blood Perspective on Hedge Fund Activism and Our Strange Corporate Governance System (2017). Yale Law Journal, Vol. 126, Pg. 1870, 2017, U of Penn, Inst for Law & Econ Research Paper No. 17-5, Harvard Law School, John M. Olin Institute for Law, Economics, and Business Discussion Paper no. 899, Available at SSRN: https://ssrn.com/abstract=2921901.
Strine, Leo E. One Fundamental Corporate Governance Question We Face: Can Corporations Be Managed for the Long Term Unless Their Powerful Electorates Also Act and Think Long Term? (2010). The Business Lawyer, vol. 66, no. 1, 2010, pp. 1–26, Available at JSTOR: www.jstor.org/stable/25758524.
Moderator
Panelists
Break
Stewardship, Hedge Fund Activism, and Controlling Shareholders: What Can – and Cannot – be Learned From the UK | Dionysia Katelouzou and Dan Puchniak
Moderator:
Stewardship, Hedge Fund Activism, and Controlling Shareholders: What Can – and Cannot – be Learned From the UK | Dionysia Katelouzou and Dan Puchniak
Presentation slides
Reading material
Puchniak, Dan W., The False Hope of Stewardship in the Context of Controlling Shareholders: Making Sense Out of the Global Transplant of a Legal Misfit (European Corporate Governance Institute - Law Working Paper No. 589/2021)
Katelouzou, Dionysia, Hedge Fund Activism and Shareholder Stewardship: An Automated Content Analysis of the Rhetoric of Stewardship (October 2020 Working Draft).
Chiu, Iris and Katelouzou, Dionysia, From Shareholder Stewardship to Shareholder Duties: Is the Time Ripe? (April 1, 2016). Published in Shareholder's Duties (Birkmose ed., Kluwer Law International, 2016), Nordic & European Company Law Working Paper No. 18-10, Available at SSRN: https://ssrn.com/abstract=2731241 or http://dx.doi.org/10.2139/ssrn.2731241.
Moderator
Panelists
Concluding remarks
Speakers
Panel Discussions
Index Fund Stewardship | Lucian Bebchuk
Index Fund Stewardship | Lucian Bebchuk
Reading material
Bebchuk, Lucian A. and Hirst, Scott, Index Funds and the Future of Corporate Governance: Theory, Evidence, and Policy (May 31, 2019). Columbia Law Review, Vol. 119, December 2019, pp. 2029-2146, European Corporate Governance Institute (ECGI) - Law Working Paper No. 433/2018, Harvard Law School John M. Olin Center Discussion Paper No. 986, Available at SSRN: https://ssrn.com/abstract=3282794 or http://dx.doi.org/10.2139/ssrn.3282794.
Bebchuk, Lucian A. and Hirst, Scott, Index Funds and the Future of Corporate Governance: Presentation Slides (November 12, 2019). Available at SSRN: https://ssrn.com/abstract=3485678 or http://dx.doi.org/10.2139/ssrn.3485678.
Bebchuk, Lucian A. and Hirst, Scott, The Specter of the Giant Three (May 9, 2019). Boston University Law Review, Vol. 99, 2019, pp. 721-741, Harvard Law School John M. Olin Center Discussion Paper No. 1004, European Corporate Governance Institute (ECGI) - Finance Working Paper No. 608/2019, Available at SSRN: https://ssrn.com/abstract=3385501 or http://dx.doi.org/10.2139/ssrn.3385501.
Lund, Dorothy S., Passive Investing and Corporate Governance: A Law and Economics Analysis (June 9, 2020). Available at SSRN: https://ssrn.com/abstract=3623381 or http://dx.doi.org/10.2139/ssrn.3623381.
Lund, Dorothy S., The Case Against Passive Shareholder Voting (March 21, 2018). 43 Journal of Corporation Law 493 (2017) , University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 829, Available at SSRN: https://ssrn.com/abstract=2992046 or http://dx.doi.org/10.2139/ssrn.2992046.
Moderator
Panelists
Systematic Stewardship | Jeff Gordon
Systematic Stewardship | Jeff Gordon
Presentation slides
Reading material
Gordon, Jeffrey N., Systematic Stewardship (Draft, October 20, 2020)
Gordon, Jeffrey N., Addressing Economic Insecurity: Why Social Insurance Is Better Than Corporate Governance Reform (August 21, 2019). CLS Blue Sky Blog. Available at: https://clsbluesky.law.columbia.edu/2019/08/21/addressing-economic-insecurity-why-social-insurance-is-better-than-corporate-governance-reform/.
Fisch, Jill E., The Uncertain Stewardship Potential of Index Funds (January 1, 2020). In, Global Shareholder Stewardship: Complexities, Challenges and Possibilities (Dionysia Katelouzou & Dan W. Puchniak eds, Cambridge University Press, Forthcoming), U of Penn, Inst for Law & Econ Research Paper No. 20-09, European Corporate Governance Institute - Law Working Paper No. 490/2020, Available at SSRN: https://ssrn.com/abstract=3525355 or http://dx.doi.org/10.2139/ssrn.3525355.
Barzuza, Michal and Curtis, Quinn and Webber, David H., Shareholder Value(s): Index Fund ESG Activism and the New Millennial Corporate Governance (August 19, 2019). 93 Southern California Law Review (Forthcoming 2020) , Available at SSRN: https://ssrn.com/abstract=3439516 or http://dx.doi.org/10.2139/ssrn.3439516.
Moderator
Panelists
Keynote: Stewardship 2021: The Centrality of Institutional Investor Regulation To Restoring a Fair and Sustainable American Economy | Leo E. Strine Jr.
Keynote: Stewardship 2021: The Centrality of Institutional Investor Regulation To Restoring a Fair and Sustainable American Economy | Leo E. Strine Jr.
Reading material
Strine, Leo E., Toward Fair and Sustainable Capitalism (August 2020). Roosevelt Institute. Available at: https://rooseveltinstitute.org/publications/toward-fair-and-sustainable-capitalism/
Strine, Leo E., Who Bleeds When the Wolves Bite? A Flesh-and-Blood Perspective on Hedge Fund Activism and Our Strange Corporate Governance System (2017). Yale Law Journal, Vol. 126, Pg. 1870, 2017, U of Penn, Inst for Law & Econ Research Paper No. 17-5, Harvard Law School, John M. Olin Institute for Law, Economics, and Business Discussion Paper no. 899, Available at SSRN: https://ssrn.com/abstract=2921901.
Strine, Leo E. One Fundamental Corporate Governance Question We Face: Can Corporations Be Managed for the Long Term Unless Their Powerful Electorates Also Act and Think Long Term? (2010). The Business Lawyer, vol. 66, no. 1, 2010, pp. 1–26, Available at JSTOR: www.jstor.org/stable/25758524.
Moderator
Panelists
Stewardship, Hedge Fund Activism, and Controlling Shareholders: What Can – and Cannot – be Learned From the UK | Dionysia Katelouzou and Dan Puchniak
Stewardship, Hedge Fund Activism, and Controlling Shareholders: What Can – and Cannot – be Learned From the UK | Dionysia Katelouzou and Dan Puchniak
Presentation slides
Reading material
Puchniak, Dan W., The False Hope of Stewardship in the Context of Controlling Shareholders: Making Sense Out of the Global Transplant of a Legal Misfit (European Corporate Governance Institute - Law Working Paper No. 589/2021)
Katelouzou, Dionysia, Hedge Fund Activism and Shareholder Stewardship: An Automated Content Analysis of the Rhetoric of Stewardship (October 2020 Working Draft).
Chiu, Iris and Katelouzou, Dionysia, From Shareholder Stewardship to Shareholder Duties: Is the Time Ripe? (April 1, 2016). Published in Shareholder's Duties (Birkmose ed., Kluwer Law International, 2016), Nordic & European Company Law Working Paper No. 18-10, Available at SSRN: https://ssrn.com/abstract=2731241 or http://dx.doi.org/10.2139/ssrn.2731241.
Moderator