Norwegian Petroleum Wealth and Universal Ownership

Abstract

How useful are universal owner arguments for a large, diversified investor such as Norges Bank Investment Management (NBIM)? This article presents concrete issues, such as climate change and corruption, which can be analysed using universal owner arguments. However, it also discusses potential weaknesses of this argumentative strategy. The article includes a general background to Norway's Government Pension Fund Global - now one of the world's largest funds - and concludes that such a fund could utilise universal owner insights in its work as an active owner by (1) addressing both companies and standard setters on issues of portfolio-wide, long-term importance; (2) respecting a division of labour between different actors in the market place; and (3) taking part in collaborative arrangements, both within organised networks and informally between investors. Copyright (c) 2007 The Authors; Journal compilation (c) 2007 Blackwell Publishing Ltd.

Corporation as a Crucial Ally Against Corruption

“…With insecure property rights, high risk of expropriation, and low reliability of contract enforcement, the number and size of firms (Beck et al, 2005), foreign investment (Mauro, 1995), profit per firm (Ades and Di Tella, 1997), long-term performance (Baucus and Baucus, 1998), and quality of produced goods (Nwabuzor, 2005) are reduced. Gjessing and Syse (2007) signal that investors recognize the additional risk, and attempt to ensure the corporation has sufficient internal controls while top management supports and implements relevant anticorruption rules. Enron and its sequels have reinforced the main hypothesis: it is in the best interest of the private sector to apply self-imposed anticorruption measures (Howlett and Rayner, 2006).…”

The Puzzle of Financial Reporting and Corporate Short‐Termism: A Universal Ownership Perspective

“…One of the major benefits of the universal owner paradigm is that that there are relatively few, easy identifiable owners of all the listed companies in the world (Gjessing and Syse 2007). This section explores the possibility of shifting the pendulum towards long‐term performance and value creation by listed companies (that is, emphasising value creation at the expense of short‐term results) by considering the mandates that universal owners may implement as a catalyst for change.…”

The Political Implications of Norway’s Sovereign Wealth Fund investments in Eastern and Central Europe

“…Holding over 1% of the total shares from different regional markets all around the world, GPFG is a leading example of a universal owner (Kiernan 2007;Gjessing, Syse 2007). The universal owner hypothesis states that although a large, long-term investor with diverse investment holdings can initially benefit from a company externalizing cost, the investor might ultimately experience a reduction in overall return due to these externalities adversely affecting returns from other assets.…”