Funds Are Hurting Investors

Username999

The problem with common ownership in index funds is that you have institutional firms—BlackRock, Vanguard, State Street—become the biggest owners of companies like Ford and GM. It hurts these companies’ incentive to compete with each other, leads to higher prices and slower economic growth.

https://www.investopedia.com/how-index-funds-are-hurting-investors-and-the-market-4688627

The_Earl_of_Streatham

If companies don't like the way their investors are behaving, they are at liberty to buy back the shares and make the company private. If the companies are worth what the shareholders think, borrowing to do this should be no problem. Other companies have done it, from the same source Boots, Dell, Burger King, Heinz and others.

Companies are happy with the loss of competition that arises from mergers and acquisitions. Why the problem with similar losses that purportedly result from shareholders getting together? It is worth noting that what they are suggesting here is just a bald assertion, no figures, no evidence.

I'm guessing that while they're nominally happy with shareholder scrutiny, successful shareholder action if they don't like what they see is much harder with an atomised ownership rather than large voting blocks. Shareholder rebellions are becoming much more common. Preventing them from forming large voting blocks is an excellent way to make sure that boardroom pay and other decisions are not challenged as is becoming more common.

They got rid of the unions, who used collective action to extract value that they considered theirs from companies, now they're trying to stop shareholders from acting collectively to extract the value that they think they're entitled to. Who'd have guessed?

[Deleted User]

I imagine the CEOs will probably be on a performance related bonus, so that would provide some incentive.