Topic_1_E2 - Topic 1 Exercise 2 Investment Environment...

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Topic 1 Exercise 2 Investment Environment Investor Activism The environment for investors has changed considerably over the last three decades. The Enron debacle in 2001, followed by the disclosures of additional manager abuses in the energy and telecommunications industries, are putting investors on notice that they may not be able to count on managers to act in their best interest. The ownership of stock has been transformed from being dominated by individual investors to one dominated by institutional investors. Larger institutional investors are more likely to put pressure on the management of the firm to make sure that the managers are maximizing the wealth of the owners of the firm. These “activist investors” are described in a BusinessWeek article entitled, “The Ultimate Value Investors.” After reading this article, address the following questions: 1. Calpers, the $156 billion public employee retirement system, is known for its shareholder activism. It put pressure on management by publicly announcing the
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Topic_1_E2 - Topic 1 Exercise 2 Investment Environment...

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