In the United States, since the 1990s, with the continuous expansion of the scale of institutional investors and the improvement of the macro concentration of corporate equity, the equity held by institutional investors has become larger in absolute terms, and the traditional passive investment and voting with their feet have been unable to adapt to the changes in the environment.
The following two models explain the reasons why institutional investors adopt the active investment strategy of corporate governance from the perspective of cost and income.
Stock effect model: under the condition of only considering investing in one stock, if pa≥pb+C/S, investors choose to participate in corporate governance (where pa is the share price of the target company after investors take corporate intelligence actions, pb is the share price of the target company before investors take corporate governance actions, C is the total cost of investors taking corporate governance actions, and S is the number of shares held by investors remains unchanged). With the increase of the number of shares held by investors, the effect of the number of shares makes shareholders participate in corporate governance more actively.
Company quantity effect model: if σ (Pai X Si) ≥σ (Pbi X Si)+TC, investors will participate in corporate governance (where Pai and Pbi are the price of the 1 stock held by investors before and after corporate governance actions, Si is the 1 stock held by investors, and TC is owned by investors). Let Ci be the cost paid by investors to participate in the 1 th corporate governance, then due to the sharing of corporate governance expertise and skills, TC is less than σ CI, and the more investors hold shares, the larger the range of TC is less than σ CI. The number effect of companies makes investors who only hold a few shares have more enthusiasm to participate in corporate governance.
Under the highly decentralized ownership structure, institutional investors are reluctant to participate in corporate governance. Because the supervision of the company's management needs to pay the supervision cost, but the benefits will be shared by other shareholders, and they will become the victims of "hitchhiking". Institutional investors are willing to participate in corporate governance only when the benefits brought by participating in corporate governance outweigh the regulatory costs. We can find that this is a standard Nash equilibrium by using game theory.
On the premise of the same supervision cost, institutional investors get more benefits from supervision than minority shareholders. Assuming that the main body of market investment in a stock is composed of institutional investors with a large share and minority shareholders with a small share, the total rate of return on stock investment after regulatory action is 65,438+000 units, and the regulatory cost is 20 units, then the matrix in Figure L below shows the payment of institutional investors and minority shareholders after adopting different strategies (excluding regulatory costs).
From the matrix in Figure L, we can know that the wisest strategy of minority shareholders is not supervision, while the wisest strategy of institutional investors is supervision. When both institutional investors and minority shareholders supervise, the former gets 50 units and the latter gets L units; When institutional investors supervise and minority shareholders don't, the former gets 50 units and the latter gets 30 units; When institutional investors don't supervise and minority shareholders don't supervise, the former gets 70 units and the latter gets 10 units; When both are unsupervised, both get 0 units. Therefore, non-supervision is the dominant strategy of minority shareholders. Assuming that minority shareholders choose not to supervise, the best choice for institutional investors can only be supervision. Therefore, the Nash equilibrium of this game process is that institutional investors should bear the responsibility of supervision, and minority shareholders are hitchhiking.
The original intention of institutional investors to actively invest is to reduce losses as much as possible. With the increase of investment activities, some institutional investors find that using active investment strategy in investment can not only reduce losses, but also gain unexpected benefits, so they no longer play the role of being trapped and talk, but become advocates and promoters of active investment strategy. In recent years, many American institutional investors began to actively seek governance-oriented investment opportunities, and achieved success, such as CaLPERS California civil service retirement system. LENS Investment Management Company, founded by corporate governance activist monks, is one of the best. LENS is known as the first corporate governance fund. LENS claims to be an investor in corporate governance and is a positive investment choice. In a sense, LENS already has the rudiment of "radical active investment". Buffett, the well-known stock king, is actually a typical active investor.
(2) The essence of active investment is to control market information.
Stock quantity effect model and company quantity effect model explain the motivation of institutional investors to make active investment based on governance. With the deepening of investment practice, many institutional investors have begun to develop from governance-based active investment to radical active investment, and there are signs of intensification. This behavior is difficult to be explained by the cost-benefit principle, so it is necessary to examine the essence of active investment from the perspective of economics and investment.
L, active investment to some extent, the return to "classical enterprises" is to reduce information asymmetry.
Assuming that the stock market is an effective market and all the information of enterprises is fully reflected in the stock price, then all investors in the market are at the same starting line, and the market game will change from the game between investors and enterprises to the game between investors and enterprises. The game between investors and enterprises can be described by the principal-agent relationship. Due to the incompleteness of the contract, in the principal-agent relationship, investors and enterprise managers are in the state of information asymmetry, and investors, as the principal, are ignorant and at a disadvantage. As agents, managers are insiders, who have more private information and are at a disadvantage. If investors don't supervise enterprise managers, it is difficult to prevent agents from using information to make behaviors that harm others and benefit themselves, that is, moral hazard behavior, because of opportunism (Williamson). It is unrealistic to hope that the information asymmetry can be completely solved by perfecting the contract. According to Simon's point of view, due to the existence of bounded rationality and transaction cost, the contract signed by people must be incomplete in some important aspects. Of course, to some extent, people can make contracts become suboptimal contracts (that is, the optimal contracts in reality) through continuous improvement, thus achieving the balance between investors and business managers. But the cost is still high.
The principal-agent relationship is closely related to the emergence of modern enterprises. The biggest difference between modern enterprises and classical enterprises is that modern enterprises separate ownership and control, while classical enterprises integrate ownership and control. When ownership and control are combined, there will be no principal-agent relationship, so there will be no information asymmetry. To some extent, active investment is the return of classical enterprises. By supervising the management of enterprises (radical active investment is direct intervention), active investors have changed from external governance to internal governance, and from external shareholders to internal shareholders. In fact, to some extent, ownership and management rights have merged into one, which is the return of classical enterprises to some extent.
2. Active investors hope to reduce uncertainty by controlling market information.
Let's look at active investment from the perspective of investment science.
The ultimate goal of all investors' investment behavior is to maximize returns under certain risks or minimize risks under certain returns. In order to achieve this goal, investors have summarized various methods from both theoretical and practical aspects. There are three traditional investment analysis methods: basic analysis method, technical analysis method and financial engineering with a large number of mathematical models (mainly CAPM model, ICAPM model, APT model, Black—Scholes formula and other pricing models).
The most critical part of basic analysis is to evaluate the enterprise value. The methods used mainly include financial analysis (especially cash flow analysis), investment project evaluation and comprehensive evaluation of managers. Others include the external environment of listed companies (such as macroeconomic environment and legal environment), the status of their industries, the level of scientific and technological development, R&D capabilities, management system, property rights and governance structure of listed companies, etc.
The theoretical basis of technical analysis is based on three assumptions: market behavior covers all information; Prices fluctuate along the trend; History will repeat itself. Technical analysis only pays attention to the appearance of stock changes, and thinks that price and quantity have comprehensively reflected the fundamentals of listed companies, so they don't care much about the actual business of listed companies. As long as the stock price shows regularity, it can be used for arbitrage.
The classical capital asset pricing theory in financial engineering pays attention to the combination of quantitative analysis and technical analysis. Due to repeated setbacks in investment practice, the American Long-term Capital Management Company (LTCM) managed by Robert C.Merton, a Nobel laureate in economics and an internationally renowned financial engineer, suffered huge losses, so it had to be reformed. Recent financial engineering theories (such as Eugene F fama and R.F Kenneth, ]996) have begun to combine mathematical analysis with basic analysis, and are widely used to investigate the behavior patterns of stock returns.
In investment management, ordinary investors usually use one or more of the above methods to select investment targets, and then make a portfolio. Once investors implement the investment plan, they can only hope that their analysis is completely correct and the development of the situation fully meets their expectations. But in fact, no matter which analysis method investors use, no matter how smart investors are, the foothold of the whole investment process is always based on the judgment of the information provided by the market. The buying and selling of stocks is actually the buying and selling of market information. In this way, the problems come out: first, whether the market information is accurate is the basis of judgment, but investors can't guarantee the accuracy of market information; Secondly, investors cannot guarantee that they can correctly understand market information and make correct judgments accordingly; Thirdly, even if the market information is accurate and the judgment made by investors is correct, the market information is only a static indicator, reflecting the past and present situation. The judgment made by investors on this basis can only be the judgment of the past and present, and cannot be extended to the future. In other words, being right now does not mean being right in the future. Assuming that the situation changes, investors' investment strategies based on existing information will have problems.
More importantly, after the introduction of efficient market theory, even the usefulness of investors' judgment has been questioned, because in an efficient securities market, because information is equal to every investor, it is impossible for any investor to obtain excess returns through information processing. Therefore, investors who believe in efficient market theory think it is very difficult to beat the market. The best way is to trust the market, diversify investment and choose an indexed portfolio to obtain the average income level of the market. Recognizing the uncertainty of market information, investors began to try to use active investment strategies.
Let's look at the derivation process: the traditional investment analysis method relies on the judgment of market information, but there is great uncertainty in the judgment of market information-the uncertainty of this judgment leads to the uncertainty of investment results.
Because the traditional analysis method has uncertainty from the origin, it is necessary to start from the origin to reduce the uncertainty of the final result. To achieve these goals, there are three ways to choose: the first way is to completely give up the judgment of market information and trust the market, and the result will become a passive and scattered index combination; The second method is to obtain inside information to ensure the accuracy of market information, but this method is not allowed by the laws of various countries; The third method is to control market information. Controlling market information can be divided into two types, one is manipulating stock prices, and the other is active investment.
The participation of active investors with different "positive" degrees in corporate governance will have different effects on enterprises, thus controlling market information to varying degrees.
Governance-oriented active investment only interferes with enterprises at a shallow level, so it can only affect market information, let alone control. Aggressive active investment has a deep participation in enterprises, so it can control market information.
There are also some radical active investors who feel that just controlling market information can no longer meet their own needs. In order to obtain more favorable market information, they do not hesitate to recreate the value of listed companies, which can be called market information creators, which is the most radical type of active investors.
Active investors have different degrees of involvement in enterprises, different costs and different benefits. The reason why investors are willing to spend more money to intervene in enterprises must be related to greater profits.