Indexing and Corporate Governance

The sixth lecture in this series was given by Professor Todd Gormley (Washington University and ECGI) on the topic "Indexing and Corporate Governance". The lecture covered the growth of indexing investment strategies and its implications for stewardship.  Professor Gormley summarized recent and ongoing research that analyzes how stock ownership by index funds does (and does not) affect firms’ governance structures, the stewardship actions of other investors, and product-market competition. He also highlighted yet unanswered questions regarding what motivates stewardship actions by indexed institutional investors and indexing’s impact on informed trading by non-index funds.  

Todd Gormley is a Professor of Finance and the Finance Area Chair at the Olin Business School at Washington University in St. Louis. He joined Olin in 2006 after graduating from M.I.T. with his PhD in Economics before moving to The Wharton School in 2009 and then returning to Olin in 2016. His earlier research focuses on why managers sometimes fail to act in the best interest of shareholders and what governance and ownership arrangements mitigate these conflicts. His most recent research has analyzed the impact of passive institutional investors’ rise on stewardship and firms. Professor Gormley's research has been featured in major media and won numerous best paper awards, and he previously served as an Associate Editor at the Review of Financial Studies and currently serves as an Associate Editor at the Journal of Financial Economics, Review of Finance, and Journal of Financial & Quantitative Analysis. 

The public lecture series is organised by Institute for Corporate Governance (ICG), in partnership with the Ostrom Workshop at Indiana University and ECGI.