In high-stakes battles over corporate debt,
hedge funds may pressure companies to default
Paul Singer, Doomsday Investor by
Sheelah Kolhatkar
Kolhatkar notes:
“The idea that companies exist solely to serve the
interests of shareholders—rather than also to serve workers, customers, and the
larger community—has been dominant in the business world in the past thirty
years. As the field of activist investing becomes increasingly crowded, many
investors are going beyond their original mission of finding ailing or
mismanaged companies and pushing them to improve. Instead, some have been
targeting larger, financially prosperous companies, such as Procter &
Gamble, Apple, and PepsiCo. “Now every company knows that they’re vulnerable,
and there’s been a wave of fear that’s taken over the public markets,” Douglas
Chia, the executive director of the Governance Center at the business-research
group the Conference Board, told me. Chia recently published a study
questioning whether the increase in activist investing and other short-term
pressures is jeopardizing the health of American businesses.”