Students Demand Divestment. Here’s What They Are Missing - Commentary

Meir Statman, professor of finance at Santa Clara University’s business school, writes:  “Disclose, divest, we will not stop, we will not rest,” chant students at many American universities, demanding that their universities’ endowments divest themselves of shares of companies they perceive as offensive. The students seem to believe, as many investors do, that selling their shares of these “offensive” companies—whether supporters of Israel, producers of weapons or distributors of tobacco products—is an effective tool for curtailing offensive operations by depriving companies of money they need to fund those operations. Yet this perception of investors is a misperception on several levels.