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External Partners Alumni Search Submit Return to home Search Search About About Olin Home Why Olin Equity, Diversity & Inclusion Leadership & Strategy News & Media Events Contact Us Programs Programs Home Explore Our Programs BS in Business Administration MBAs Specialized Master's Doctoral Executive Education Dual Degrees Faculty & Research Faculty & Research Home Faculty Directory Research Research Centers Olin Brookings Commission Olin Award Student Resources Student Resources Home Career Services Center for Experiential Learning Entrepreneurship Academic Calendars Student Organizations For Current Students For Military Veterans Admissions Admissions Home Scholarships & Aid Attend Program Events Visit Olin Ask a Student Student Profiles Request Information Refer a Candidate External Partners Alumni In the media: Gormley offers defense of index investing January 10, 2018 By WashU Olin Business School 1 minute read Home News In the media: Gormley offers defense of index investing As the passive investing strategy has taken the market by storm, criticism of index funds and common ownership have increased: Are index funds evil (as asked by&＃160;The Atlantic)? Are they bad for the economy? Common ownership came under fire last year with&＃160;a study&＃160;finding that &＃8220;airlines compete less vigorously on price because they are owned by the same handful of investors,&＃8221;&＃160;writes David Nicklaus. However, in an interview with&＃160;The St. Louis Post-Dispatch, Olin&＃8217;s&＃160;Todd Gormley, associate professor of finance, provides a defense for companies with higher index-fund ownership: They actually have better governance. An active money manager who doesn&＃8217;t like the way a company is run can simply sell the shares. The passive manager doesn&＃8217;t have that choice. &＃8220;In their view, the only way they can protect themselves is to make sure there are good governance structures in place,&＃8221; Gormley said. Besides, he said, long-term passive investors often back activist hedge funds that attempt to shake up a company. &＃8220;We found a positive influence on governance,&＃8221; Gormley said. &＃8220;The presence of these index funds makes it easier for other investors, the activists, to get into a company and provide discipline over management.&＃8221; Gormley was recently quoted in the&＃160;Princeton Alumni Weekly&＃160;on the same subject, where he discusses the evidence of some positive effects of passive ownership. About the Author WashU Olin Business School Firmly established at the Gateway to the West, Olin Business School at Washington University in St. Louis stands as the gateway to something far grander in scale. The education we deliver prepares our students to thoughtfully make difficult decisions—the kind that can change the world. Contact Us For assistance in finding faculty experts, please contact Washington University Public Affairs. Monday&＃8211;Friday, 8:30 to 5 p.m. Sara Savat, Senior News Director, Business and Social [email protected] &＃160; Kurt Greenbaum,Communications [email protected] Twitter: WUSTLnews Share article Apply Now Visit Us Request Info One Brookings Drive, St. Louis, MO 63130-4899 [email protected] 314-935-7301 News & Media Events Faculty Directory WashU Center for Career Engagement Washington University home Olin Links Sitemap Privacy Policies Title IX Accessibility ©2024 Washington University in St. Louis