Political Voice, Fiduciary Activism, and the Institutional Ownership of U.S. Corporations: The Role of Public and Noncorporate Pension Funds

This article examines the significance of the change from ownership of corporate equity (and debt) primarily by individuals to about half held by institutions. Most important among these are pension funds, of which public and noncorporate funds are the focus of the article. It is argued that public and noncorporate funds play an increasingly important role in corporate governance and policy. These "fiduciary activists" are central actors in the emergence of "relationship investing," resulting in the bypassing of market mechanisms in many important instances. The article examines a variety of recent examples of political voices of these institutions, concluding there is a partial, if messy, "remarriage" between the ownership and control of the modern corporation. This implies that U.S. corporations are in a significant sense neither merely "private" capitalist enterprises, nor public either, but an emerging entity containing public and private aspects along with an emerging "civil" ownership quality (i.e., by unions and other nonstate entities).