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The Clash of the Cultures: Investment vs. Speculation by Arthur Levitt Jr., John C. Bogle

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Contents

Foreword

Acknowledgments

About This Book

Chapter 1: The Clash of the Cultures

The Rise of Speculation

High-Frequency Trading

Mission Aborted

Futures and Derivatives

The Wall Street Casino

How Speculation Overwhelmed Investment

The Decline in Unit Transaction Costs

Hedge Fund Managers and Other Speculators

We Can’t Say We Weren’t Warned

The Wisdom of John Maynard Keynes

Speculation Will Crowd Out Investment

Fixing the Social Contract

Compensation Issues

Creating Value versus Subtracting Value

Restoring Balance in Our Investment Sector

Tax Policies and Financial Transactions

Develop Limits on Leverage, Transparency for Derivatives, and Stricter Punishments for Financial Crimes

The Rules of the Game

The Goal: Stewardship Capitalism

Chapter 2: The Double-Agency Society and the Happy Conspiracy

The Development of the Double-Agency Society

Examining the Conflict

Agency Costs and Managerial Behavior

The Ownership Revolution

Changing Leadership

Renters and Owners

The Creation of Corporate Value

Time Horizons and the Sources of Investment Return

“Short-Termism” and Managed Earnings

The Failure of the Gatekeepers

Conclusion

Chapter 3: The Silence of the Funds

Why Mutual Funds Are Passive Participants in Corporate Governance

The Picture Begins to Change

Reporting Proxy Votes

Mobilizing Institutional Investors

The Rights and Responsibilities of Ownership

Acting Like Owners

“The Proof of the Pudding”

Executive Compensation

How Did It Happen?

The Ratchet Effect

What’s to Be Done?

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