Monday, 12 October 2009

Myners in the FT

Paul Myners has an article in todays FT on ownership that is worth a read. A couple of bit particularly caught my eye. For example this bit:

Investors' emphasis on short-term return communicates itself to business leaders who feel obliged to think and act short-term; take on more risk, which the fund manager reduces through diversification - an option not open to employees.

This is very much in line with the point raised by Margaret Blair, that employees make a firm-specific investment. Some good stuff here too about why fund managers end up focusing on the short term (what signals are their clients sending them?)

And this bit:

I am struck by the absence of a body in the UK that speaks on behalf of institutional investors without a commercial or trade association interest. Creating an independent Council for Institutional Investors would be a step forward.

I reckon some sort of UK version of the CII is long overdue. As I've blogged a bit before, it's a bit of a problem that collaborative engagement gets funneled through trade bodies which lobby on several fronts (ie ABI represents insurers as PLCs as well as shareholders), rather than through a body that only represents investors as investors (and the real investors - not the investment agents - too).

1 comment:

Paulie said...

There's a short-termism in a lot of managment as well - particularly as 'management' becomes more interchangeable and people go from (for example) running an ad agency to running the FA.

I have to watch broadcasting policy a fair bit from a pro-PSB position - I often see Mark Thompson speaking and think to myself "you will be earning more than you are now as an employee of a commercial rival to the BBC"

It heightens your 'absentee landlord' analogy.