Institutional investors as stewards of the corporation: Exploring the challenges to the monitoring hypothesis

Abstract

The study explores the challenges UK-based institutional investors face when trying to monitor investee companies and influence their social, environmental, and governance practices. Consistent with previous research, I find that misalignment of interests within the investment chain and dispersed ownership are factors which inhibit investor activism. However, other underexplored challenges include lack of investee company transparency and investor experience in activism, as well as low client demand for engagement and internal conflicts of interest. The results contribute to the literature on institutional investor activism by using direct empirical evidence to systematically discuss the challenges to stewardship. Given the intensification of media and regulatory attention on shareholders in the post-global financial crisis era, coupled with investors' growing awareness and practice of stewardship, the research opens new avenues for enquiry which go beyond the on-going debate about the monitoring versus short-termism roles of institutional investors. | INTRODUCTIONThe global

Commitment of independent and institutional women directors to corporate social responsibility reporting

“…Institutional directors on boards represent dominant investors, such as institutional investors. According to the agency theory, these investors become actively involved with management activities, leaving their passive roles regarding the supervision of managers (Ivanova, ). Additionally, institutional investors constitute one of the most important elements in the corporate decision‐making process (Ruiz‐Mallorqui & Santana‐Martín, ).…”

Inside the family firms: The impact of family and institutional ownership on executive remuneration

“…The institutional investors may simply sell their shares and exit the firms rather than monitoring because the monitoring cost involved may exceed the benefit. Besides, they may face several impediments that hinder their ability to monitor, such as liquidity concerns, free rider problems and internal conflict of interests (Cvijanović, Dasgupta, & Zachariadis, 2016;Ivanova, 2017;McCahery, Sautner, & Starks, 2016). In addition, they may lack knowledge and experience of how to effectively engage with the investee firms.…”

Interculturality as a source of organisational positivity in expatriate work teams: An exploratory study

“…Another reason that encouraged a qualitative, interview‐based exploration was that the majority of cross‐cultural studies have been based on questionnaire surveys implicitly rooted in North American cultural values (Segalla, Fischer, & Sandner, ). The third reason that supported the methodological choice is grounded in the fact that qualitative interviews are an established approach in the business ethics research (Gillespie, Hybnerova, Esmark, & Noble, ; Ivanova, ; Lehnert, Craft, Singh, & Park, ; Moosmayer, Niemand, & Siems, ). The study drew on the epistemology of social constructivism (Kukla, ) and employed a discursive method.…”