Eric Posner on Whether Vanguard and BlackRock Own Too Much of Corporate America

Do Vanguard and BlackRock Own Too Much of Corporate America?

Eric Posner is the Kirkland and Ellis Distinguished Service Professor of Law and Arthur and Esther Kane Research Chair at the University of Chicago Law School. Among his research interests is the question of the increasing concentration of ownership in corporate America, including the role of institutional investors. A recent paper he cowrote, in which he proposes limiting the companies an index fund can own in one industry, caught our attention, and we wanted to learn more. We talked with Posner on two occasions in September. Our conversation has been edited for clarity and length.

Morningstar: Eric, how did you become involved in this topic of concentrated ownership?

Eric Posner: I was brought in by Glen Weyl, who is an economist at Microsoft Research. Glen and I have worked on many different academic projects together. Glen had read papers by José Azar and others that found a strong correlation between common ownership by institutional investors and prices that the firms that they own charge customers.1 Glen was immediately struck by how powerful this work was and asked me to write a paper with him.2 Fiona Scott Morton joined us as well. Because I am a law professor, I could provide some of the legal background and analysis to our paper.

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