By Xavier Vives –
The growth of institutional investment has been formidable. This rise of diversified institutional investment has raised antitrust concerns, mostly in the U.S. One reason is that the proportion of U.S. public firms in the hands of institutional investors, which at the same time hold large blocks of other firms in the same industry, has grown dramatically. The result is that top shareholders of the main companies in quite a few industries are funds such as BlackRock, Vanguard, Fidelity or State Street. The concern is that managers may internalize the interests of these common stakeholders in their competitive industry decisions. Even though passive investors have no possibility to exercise control with an “exit,” they do have a “voice.”
