ABSTRACT
Diffuse shareholding, long a cornerstone of agency theorizing about corporate governance, has become in fact rather rare, as recent path-breaking research by the Organization for Economic Co-operation and Development (OECD) on ownership patterns reveals. Institutional investors have come to dominate global equity markets, alongside state-controlled pension and sovereign wealth firms, private equity firms, shareholder activist funds, and a class of new blockholders. The dominant form of theorizing in the field of corporate governance has been the logic of principal-agent relationships. The union-based funds populate the first and second, while a set of for-profit institutional investors populate the right. The presence of passive investment strategies by increasingly concentrated investment managers yields a range of research observations. Index funds are locked into particular portfolios, but investors are not locked into specific funds. Investors chose funds on the basis of fee-adjusted performance.
