About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

171 U. Pa. L. Rev. 77 (2022-2023)
Asset Managers as Regulators

handle is hein.journals/pnlr171 and id is 81 raw text is: ARTICLE ASSET MANAGERS AS REGULATORS DOROTHY S. LUNDt The conventional view of regulation is that it exists to constrain corporate activity that harms the public. But amid perceptions of government failure, many now call on corporations to tackle social problems themselves. And in this moment of dissatisfaction with government, powerful asset managers have stepped in to serve as regulators of last resort, adopting rules that bind corporate America on issues of great social importance, including climate change and workplace diversity. This Article describes this dynamic-where shareholders have become regulators-which has been made possible by the rise of institutional shareholding (and index investing in particular) and the contemporaneous growth of shareholder power. As a result, the large diversified asset managers that specialize in index funds (the so-called Big Three-Vanguard, State Street, and BlackRock) collectively hold nearly controlling stakes across the public equity market. In addition to intervening in traditional areas of corporate governance, they have adopted sweeping board diversity mandates as well as ESG disclosure and carbon emission reduction requirements, and enforced them through their proxy voting policies. And the early consensus is that asset t Associate Professor of Law, USC Gould School of Law. Thanks to Scott Altman, Adam Badawi, Jordan Barry, Bobby Bartlett, Alon Brav, Cary Coglianese, Robin Craig, Jill Fisch, Jeff Gordon, Chris Havasy, Scott Hirst, Cathy Hwang, Alex Lee, Saul Levmore, Paul Mahoney, John Matsusaka, Amelia Miazad, Frank Partnoy, Elizabeth Pollman, Bob Rasmussen, Adriana Robertson, Edward Rock, Roy Shapira, Bernie Sharfman, Michael Simkovic, Sonia Steinway, Leo Strine Jr., Rory Van Loo, Abby Wood, and participants in the Boston University Law Review Symposium on Law, Markets, and Distribution; Columbia Law School Faculty Workshop; Duke/Berkeley Organizations and Social Impact Workshop; ILE Spring Corporate Roundtable; Larry Ribstein Law and Economics Workshop at George Mason; Tel Aviv University Corporate Workshop; University of Pennsylvania Faculty Workshop; University of Pennsylvania Regulatory Law and Policy Seminar; UCLA-Bucerius Workshop; USC Gould Faculty Workshop; University of Toronto Law and Economics Workshop; and Junior Business Law Scholars Conference for insightful comments. Hayk Badalayan, Camille Brown, John Cook, Artem Joukov, and Meghann Lamb provided excellent research assistance. I am also grateful for enlightening conversations with corporate executives and asset manager stewardship team members who wish to remain anonymous. (77)

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most