A WELFARE FUNCTION FOR SHAREHOLDER ENGAGEMENT: RECOGNIZING PROFIT FOR WHAT IT IS

摘要

Madison Condon's Externalities and the Common Owner (ECO) plays an important role in the growing literature around shareholder activism aimed at increasing portfolio returns, regardless of individual firm effects. The article raises important questions of political economy, power distribution, and anticompetitive activity. In this Comment, I introduce key terminology for discussing these issues, and then reframe several issues raised by the article. Defining terms can go a long way toward establishing common ground for discussion and helping to properly frame critical questions. Alpha. The relative financial return of a residual security (typically common stock) or a portfolio of residual securities compared to the average return of a security or portfolio with similar volatility over a fixed period. ESG integration. The shareholder practice of exercising corporate governance rights and otherwise engaging with a portfolio company in order to improve the company's internal governance and social and environmental impacts, all with a goal of increasing the company's shareholder value.