Excluding the Bank of America shareholder vote, are most institutional investors--the ones that cannot charge performance fees, anyway--unable to hold managements' feet to the fire? AllAboutAlpha takes a look at a recent study by University of Oregon professor Robert Illig (in the Alabama Law Review) that suggests funds that can charge performance fees--public pensions and mutual funds cannot--lack such incentives. However if they were to be able to charge such fees, the ways hedge funds and private equity firms could, "their interests and the interests of their investors would merge. As a result, they would be transformed into ideal servants of shareholder interests, capable of bringing much-needed discipline to corporate America."

Mutual funds care most about growing assets; performance gains are less important. They'd rather sell a stock than fight. But hedge funds, well, they have a direct stake in the stock going up. Do you buy it? Did the recent boom in hedge funds improve corporate governance? Is there any evidence of this empirically? 

For more:
- here's the article

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