Institutional investors in global markets / Gordon L. Clark and Ashby H. B. Monk.

Format:

Book

Author/Creator:

Clark, Gordon L., author.

Monk, Ashby H. B. (Ashby Henry Benning), 1976- author.

Language:

English

Subjects (All):

Institutional investments.

Institutional investors.

Global custody (Securities).

Physical Description:

xxii, 252 pages : illustrations ; 24 cm

regular print

Edition:

First Edition.

Place of Publication:

Oxford : Oxford University Press, 2017.

Summary:

This book provides you with a comprehensive overview about what institutional investors do, how they do it, and when and where they do it; it is about the production of investment returns in the global economy. Being a book about the production process, you learn about key issues found in the academic literature on the theory of the firm. In this case, the focus is on the global financial services industry, where the building blocks underpinning the study of industrial corporations are less relevant. You gain an understanding of how and why the production of investment returns differs from that of manufactured goods. You are provided with an analytical framework that situates financial institutions within the complex web of the intermediaries that dominate developed financial markets. In summary, you gain further insights into analysis of the organization and management of institutional investors; as well as an analysis of the global financial services industry.

Contents:

1 Introduction 1

Institutional Investors 2

Financial Risk and Uncertainty 6

Theory and Practice 6

Risk and Uncertainty 7

Learning by Doing 9

Methodology and Exposition 10

Outline of the Book 14

2 Institutions and Organizations 19

Nomenclature 20

Institutions in the Social Sciences 23

Organizations, Inside and Out 25

Organizations, Networks, and Resources 28

Building Blocks 31

3 The Architecture of Information 37

The Information-Industry Nexus 38

Institutional Size and Scope 40

Governance of Financial Institutions 42

The Architecture of Financial Information 45

Investment on the Margin 48

Pipeline Extensions 50

Pipelines and Buzz 51

Buzz 52

Conclusions 53

4 Production of Investment Returns 58

Coase, Contract, and Location 60

Financial Institutions: Building Blocks 62

Ecology of Finance 63

Managers and Workers 63

Coordination 64

Producing Investment Returns 66

Stocks and Flows 67

Small and Large Institutions 67

Flexibility and Adaptation 68

Global Financial Centres and Markets 72

The Base Case: Co-location 73

The Base Case (Redux): Co-location on the Margin 73

The Intermediate Case: Global Market Integration 74

The Limit Case: Realizing Value in Emerging Markets 76

Implications and Conclusions 78

5 Scope of Financial Institutions 82

Theory of the Firm 83

Governance, Contract, and the Firm 85

The Institution and its Industry 89

Tasks and Functions 92

Insourcing 92

Outsourcing 94

Geographical Reach: Offshoring 95

Implications and Conclusions 98

6 Investment Management Contracts 102

The Nature of Contract 103

Financial Institutions and Financial Markets 105

Agents, Principals, and Fiduciaries 105

Geographical Structure of the Industry 106

Products Sought and Produced 107

Product and Financial Markets 108

Investor Strategy and Skill 109

Contract: Form, Functions, and Performance 109

Form 110

Fucntions 111

Performance 112

Choice of Jurisdiction 112

In Situ or Default Contracting 112

Contracting in London 114

Contracting in Offshore Jurisdictions 115

The Map of Contract 116

Implications and Conclusions 118

7 Public-sector Contracting for Investment Services 122

State and Local Pension Institutions 124

Pension Funds: Form and Functions 126

Governance and Management 126

Norms and Conventions 127

Contractual Relationship 128

Employment Contracts 128

Pre-contract Screening 129

Commerical Contracts 129

Contracts and Templates 130

Content of RFPs 130

Templates, Terms, and Conditions 132

Community Norms 135

Commonalities and Differences 136

Implications and Conclusions 139

Appendix 143

8 Advisers and Consultants 145

Theory of Intermediation 147

Financial Intermediation 147

Capabilities and Resources 148

Organizational Form 149

What Do Advisers Do? 150

Case 1 Small Fund, Representative Board, Wholly Outsourced 150

Case 2 Medium Fund, Representative Board, Mixed Sourcing Strategy 151

Case 3 Large Fund, Representative Board, Reliant on Insourcing 152

Contracts and Services 153

Ambiguity, Contract, and Financial Market 157

Modes of Innovation 160

Market Disjuncture 160

Innovation in Form and Function 162

Innovation in Products and Services 163

Implications and Conclusions 164

9 Outsourcing and the Principal-Agent Problem 169

Convention and Financial Markets 170

Board Authority and Governance 171

Investment Models and Expectations 172

Market Position and Performance 172

Models of Management 173

Economies of Scale and Scope 174

Outsourcing Strategy 174

Four Ideal Types 175

Principles and Practices 177

Nine Principles 177

Practice as Contract 180

The Principal-Agent Problem 181

Identity and Responsibility 182

Two Institutional Factors 182

Governing OCIO Management 183

Implications and Conclusions 185

10 Cooperation and Collaboration 189

Returing to Fundamentals 190

Persistence and Competitions 190

Economies of Scale and Scope 191

Contingency and Response 192

Objectives, Contract, and Authority 193

Objectives and Constraints 193

The Employment Relation 194

Service Contracts 194

Authority and Convention 196

Modes of Innovation 196

Cooperation 197

Collaboration 198

Agency and Governance 200

Transforming Home Bias 201

Conferences and Research Clubs 201

Seeding-related Ventures 202

Partnerships, Informal and Formal 203

Investment Clubs and Shared Equity 204

Implications and Conclusions 205

11 Reframing Finance 208

A Reason for Being 209

The Case for Innovation 211

Prudent Innovation 213

Catalysts for Innovation 214

Extra-financial Objective 215

Fees and Cost Transparency 215

Collaboration and Cooperation 216

Competitive Advantages 216

Innovation Implemented 217

Sensing 219

Seizing 219

Transforming 219

A Real-World Example 220

Some Final Thoughts 221.

Notes:

Includes bibliography (pages 223-240) and indexes.

ISBN:

9780198793212

0198793219

OCLC:

999363613