scholarly journals Institutional Investors in Corporate Governance

2015 ◽  
Author(s):  
Edward Rock
Keyword(s):  
Corporate Governance ◽  
Mutual Funds ◽  
Hedge Funds ◽  
Institutional Investors ◽  
Historical Evolution ◽  
The Us ◽  
Competing Hypotheses ◽  
Institutional Shareholders ◽  
Over Time

This chapter examines the role of institutional investors in corporate governance and whether regulation is likely to encourage them to become active stewards. It considers the lessons that can be learned from the US experience for the EU’s 2014 proposed amendments to the Shareholder Rights Directive. After reviewing how institutional investors fit within the historical evolution of finance, the chapter documents the growth in institutions equity holdings over time. It explains how institutional investors are governed and organize share voting before turning to two competing hypotheses to account for the relative passivity of institutional investors: the excessive regulation and the inadequate incentives hypotheses. In evaluating these hypotheses, it reviews the results of the SEC’s attempt to incentivize mutual funds to vote their shares. The chapter concludes by highlighting the role of hedge funds in catalyzing institutional shareholders, along with some of the risks associated with such highly incentivized actors.

scholarly journals Institutional Ownership and Firm Performance under Stakeholder-Oriented Corporate Governance

2020 ◽  
Vol 12 (3) ◽  
pp. 1021 ◽  
Author(s):  
Hideaki Sakawa ◽  
Naoki Watanabel
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Institutional Investors ◽  
Institutional Ownership ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
Institutional Shareholders ◽  
Japanese Corporations ◽  
Oriented System

This study aimed to reveal the role of institutional investors with shareholder-oriented scopes in a stakeholder-oriented economy such as Japan. With financial globalization, the increasing number of institutional shareholders in Japanese corporations enables us to investigate whether their shareholder-oriented perspectives are conducive to taking on effective monitoring roles under stakeholder-oriented corporate governance. This study’s sample included large listed firms of the TOPIX 500 in Japan during 2010-2016. Using 2924 firm-year observations, the effect of institutional investors on firm performance was analyzed to test the role of institutional investors in stakeholder-oriented corporate governance. Our study showed that the monitoring role of institutional shareholders, or foreign shareholders, functions effectively in Japanese corporations. In addition, we showed that the monitoring roles of these are expected to strengthen firms through higher growth opportunities. These results implied that institutional shareholders contribute to enhancing sustainable firm performance and constructing sustainable corporate governance mechanisms in a stakeholder-oriented system.

scholarly journals The financial system and corporate governance in Japan

2006 ◽  
Vol 3 (3) ◽  
pp. 27-28 ◽  
Author(s):  
Mitsuaki Okabe
Keyword(s):  
Corporate Governance ◽  
Information And Communication Technologies ◽  
Institutional Investors ◽  
Communication Technologies ◽  
Japanese Economy ◽  
Information And Communication ◽  
Japanese Corporations ◽  
Main Banks ◽  
Cross Shareholdings

Corporations may be said to be engines of any market economy and their proper behavior is a key to economic, hence human, security. This paper argues that one of the most important causes for the prolonged period of recessions of the Japanese economy in the 1990’s is deeply rooted in the long-established financial structure of the economy and in the closely related issue of corporate governance. Although Japanese corporations have been traditionally understood that their activities are monitored and governed by “main banks,” this framework has been changing over the last 10-15 years toward corporate governance driven by pressure from capital markets. This change has been necessitated by: (a) less need on the part of corporations to rely on banks in acquiring funds, (b) ongoing dissolution of cross shareholdings, (3) an increasing importance for the role of institutional investors, and (4) innovations in information and communication technologies. The change may be regarded as being one from “process innovation” toward a system conducive to “product innovation;” hence a desirable shift. There remain, however, a number of policy tasks, such as institutional improvement in securities investment trusts and the need to better define the role of institutional investors

scholarly journals The Rise of Institutional Investors

2019 ◽  
Author(s):  
Jan Fichtner
Keyword(s):  
Mutual Funds ◽  
Hedge Funds ◽  
Institutional Investors ◽  
Private Equity ◽  
Short Term ◽  
Equity Funds ◽  
Private Equity Funds ◽  
Important Position ◽  
State Street ◽  
Asset Managers

During the last decades, institutional investors gained an ever more important position as managers of assets and owners of corporations. By demanding (short-term) shareholder value, some of them have driven the financialization of corporations and of the financial sector itself. This chapter first characterizes the specific roles that private equity funds, hedge funds, and mutual funds have played in this development. It then moves on to focus on one group of institutional investors that is rapidly becoming a pivotal factor for corporate control in many countries – the “Big Three” large passive asset managers BlackRock, Vanguard and State Street.

6. Company Management and Governance

2020 ◽  
pp. 100-120
Author(s):  
Imogen Moore
Keyword(s):  
Corporate Governance ◽  
Institutional Investors ◽  
Executive Directors ◽  
Corporate Governance Code ◽  
Executive Remuneration ◽  
Questions And Answers ◽  
The Uk ◽  
And Control ◽  
The Relationship

The Concentrate Questions and Answers series offers the best preparation for tackling exam questions and coursework. Each book includes typical questions, suggested answers with commentary, illustrative diagrams, guidance on how to develop your answer, suggestions for further reading, and advice on exams and coursework. This chapter explores important issues in company management and corporate governance, starting by examining the role of directors and shareholders (and the relationship between them) and the separation of ‘ownership and control’. Since the early 1990s, the governance of listed companies has been dominated by self-regulatory codes (currently the UK Corporate Governance Code). This chapter examines how these codes operate and considers key themes in corporate governance, including the role of non-executive directors and auditors; the position of institutional investors; and executive remuneration.

Debt and Corporate Governance

2015 ◽  
Author(s):  
Charles K. Whitehead
Keyword(s):  
Corporate Governance ◽  
Credit Risk ◽  
Credit Market ◽  
Lending Relationships ◽  
Private Credit ◽  
Traditional Function ◽  
Over Time

This chapter focuses on the evolving role of debt as a tool of corporate governance, or debt governance, within the context of developments in the private credit market. It first discusses debt’s traditional function, with particular emphasis on illiquid loans and the lenders’ reliance on monitoring and covenants in order to manage a borrower’s credit risk. It then considers how loans and lending relationships have evolved over time in light of the increased liquidity of traditionally private instruments. One outcome for debt governance may be a shift from the traditional dependence on covenants and monitoring to a greater reliance on the disciplining effect of liquid credit instruments.

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