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Economic Reports

Investor Activism May Do Little For Shareholders

Corporate executives are often annoyed when major institutional shareholders such as pension funds call for big changes in company practices.

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But a new study finds that the growing activism of major investors - and publicity about "pension power" - has had "no appreciable effect on firm performance."

Dan Dalton of Indiana University, Bloomington, who did the research with three other management professors, says neither profits or stock prices appear to have been affected by investor activism in the years 1990 through 1993.

The researchers, examining a random sample of 200 large companies and 975 of their institutional investors, tested whether performance would be affected by any of four factors: the proportion of stock held by institutions, the amount held by public pension funds (such as those representing state employees), activist shareholders, or governance-related proxy votes (such as seeking to separate the roles of chairman and CEO). No test showed a significant pattern.

So has all the activism been for naught? Maybe so, but one of the researchers says governance issues can make a difference as "crisis preparation."

- Staff

A Cart? A Car? It's both

While the big carmakers are laying plans to build the full-scale electric vehicle of the future, Bombardier Inc. has its eye a niche market of today.

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The Montreal company's Neighborhood Electric Vehicle, which looks like a glorified golf cart, aims "to meet the needs of a growing segment of the American population - particularly retirees - who live in master-plan communities," says Pierre Beaudoin, president of Bombardier's consumer-vehicle division. Automobile circulation is often restricted in these communities, which are sprouting up in sunny states like Arizona.

The two-seat NEV runs on an electric motor using lead batteries. Its range is 25 to 35 miles. Top speed: 25 miles an hour. To refuel, you connect it to a regular 110-volt socket. So how's it different from a golf cart? It's a bit bigger, has a locking trunk, and goes faster. It also costs a little more, about $7,000. After test marketing this fall, full production will start in the winter.

- Fred Langan

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