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Most Helpful Customer Reviews
3 of 3 people found the following review helpful:
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This review is from: Fortune and Folly: The Wealth and Power of Institutional Investing (Hardcover)
O'Barr and Conley used the tools of anthropology to locate a common thread in the culture of pension funds, "an overriding concern with managing personal relationships" and an all pervasive "need to manage responsibility and blame."
Involvement by fund trustees in corporate governance issues is not yet the norm. Fiduciaries are caught in a culture and, indeed, a legal framework that makes it difficult to do anything but follow the herd. Establishing corporate governance policies that can be used as guides in proxy contests is fraught with difficulty. Pension fund trustees are reluctant to get involved. If they monitor their investment manager's proxy voting they potentially reap the rewards of reducing agency costs by holding corporate boards and CEOs accountable. However, if they do get involved, it is certain that they also run the risk that such involvement will result in severe pressures from those who appoint them or elect them to their fiduciary offices. If so few fiduciaries are bold enough to establish corporate governance policies and monitor their application, then maybe it would be a violation of "prudence" to do so. Being prudent doesn't usually mean sticking your neck out. However, in this case it does. The law requires fiduciaries to use their senses, use their brains, and monitor to make sure they get what they pay for. A private shareholder is under no such legal obligation. Hopefully, they have the good sense to do so anyway or, if they are lucky, someone else will watch out for them and they can get a "free ride." However, there are few genuine "free rides" in the field of either investments or politics. If the ride is a good one, somebody has usually paid the bill. If its a bad one, all shareholders or citizens pay to undo the damage done by irresponsible representatives. Yet, years later the situation is beginning to change. To learn about that, read "The Rise of Fiduciary Capitalism" by James P. Hawley and Andrew T. Williams.
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