The Pension Fund: A Source of Social Payments

The growth of pension funds as dominant owners represents one of the most remarkable changes in economic history. Even the largest American pension fund owns too small a share of any company to control it. Not being commercial companies, the funds do not have access to detailed commercial or business information. They are not focused on business, nor is it possible; they are asset managers. However, funds require deep economic analysis of the companies they collectively own. They also need an institutional structure overseeing management activities. I suspect that eventually we will develop a formal practice of business auditing similar to the financial audit by independent professional accounting firms. Since there is no need to conduct a business audit every year (in most cases, once every three years is sufficient), it needs to be based on certain standards and include a systematic evaluation of the firm's activities: goals and strategies, marketing, innovation, productivity, and profitability growth. TIP OF THE DAY Do you know which pension funds are shareholders in your company? What is their system for obtaining information about its activities?