[opiniojuris] Chris Borgen: Perino Comments on Sovereign Wealth Funds

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Posted by Chris Borgen:
Perino Comments on Sovereign Wealth Funds
http://www.opiniojuris.org/posts/1183038223.shtml


   My colleague [1]Michael Perino, who teaches and writes in the area of
   securities regulation, had the following comment regarding the
   sovereign wealth funds discussion in [2]my earlier post:

     One point of perspective worth keeping in mind is that shareholders
     (despite some of the claims in the article) are quite weak in the
     US. In large part that weakness flows from collective action
     problems and the unusually diffuse ownership structure of US
     corporations. While I suppose China or other countries have the
     wherewithal to buy companies outright and thereby exercise
     substantial control, this will create a significant political
     backlash (see CNOOCâs proposed purchase of Unocal just last year).
     Indeed, I think it is quite significant that Chinaâs first big move
     was to invest in Blackstone (a hedge fund rather than an operating
     company). And, more significantly, when the deal was announced it
     was emphasized that China would have no voting rights or any
     influence over Blackstoneâs decision making. To be sure, Blackstone
     will certainly not want to make a big investor unhappy, but I think
     China, at least for now, is for political purposes seeking to paint
     itself as merely a passive investor. I would also add that these
     investments come after decades of privatization deals. Governments
     have repeatedly shown that they are particularly inept business
     people. Now, of course, that may play second fiddle to broader
     political objectives and it is certainly possible that political
     leaders today will not have learned the lessons of the past, but it
     seems unlikely to me that governments are really looking to call
     the shots at private companies.

References

   1. http://new.stjohns.edu/academics/graduate/law/faculty/profiles/Perino
   2. http://www.opiniojuris.org/posts/1182836339.shtml