Publications

@article{PetryFichtnerHeemskerk2019b,
title = {Steering capital: the growing private authority of index providers in the age of passive asset management},
author = {J Petry and J Fichtner and E M Heemskerk},
url = {https://www.tandfonline.com/doi/full/10.1080/09692290.2019.1699147},
doi = {https://doi.org/10.1080/09692290.2019.1699147},
year = {2019},
date = {2019-12-10},
journal = {Review of International Political Economy},
abstract = {Since the global financial crisis, there is a massive shift of assets towards index funds. Rather than picking stocks, index funds replicate stock indices such as the S&P 500. But where do these indices actually come from? This paper analyzes the politico-economic role of index providers, a small group of highly profitable firms including MSCI, S&P DJI, and FTSE Russell, and develops a research agenda from an IPE perspective. We argue that these index providers have become actors that exercise growing private authority as they steer investments through the indices they create and maintain. While technical expertise is a precondition, their brand is the primary source of index provider authority, which is entrenched through network externalities. Rather than a purely technical exercise, constructing indices is inherently political. Which companies or countries are included into an index or excluded (i.e. receive investment in- or outflows) is based on criteria defined by index providers, thereby setting standards for corporate governance and investor access. Hence, in this new age of passive asset management index providers are becoming gatekeepers that exert de facto regulatory power and thus may have important effects on corporate governance and the economic policies of countries.},
keywords = {capital flows, index funds, index providers, passive asset management, private authority, stock market indices},
pubstate = {published},
tppubtype = {article}
}

@article{Fichter2019,
title = {The New Permanent Universal Owners: Index Funds, (Im)patient Capital, and the Claim of Long-termism},
author = {J Fichtner and E M Heemskerk},
url = {https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3321597},
year = {2018},
date = {2018-11-13},
journal = {SSRN},
pages = {1-30},
abstract = {Fundamental change is happening in asset management – the shift from actively managed funds
to index funds. This money mass migration into index funds has far-reaching consequences,
because it leads to a concentration of corporate ownership in the hands of the ‘Big Three’ asset
managers. We call BlackRock, Vanguard, and State Street the ‘New Permanent Universal
Owners’ as they are invested indefinitely in thousands of member firms of stock indexes. We
provide novel findings on the combined ownership of the Big Three in 17 major stock indexes
from nine countries. Furthermore, we shed light on the impact of index funds on the dichotomy
between ‘patient’ and ‘impatient’ capital. The Big Three have proclaimed themselves
champions of long-termism. We analyze their voting behavior in five countries concerning two
proxies for corporate short-termism: share buybacks, and mergers and acquisitions. So far, they
have not unambiguously acted as champions of long-termism.},
keywords = {asset managers, corporate governance, corporate ownership, index funds, shorttermism, varieties of capitalism},
pubstate = {published},
tppubtype = {article}
}