Institutional Investors, Corporate Ownership and Corporate Governance: Global Perspectives

Abstract

We examine the role of institutional investors in financial markets and in corporate governance. In many countries, institutional investors have become the predominant players in financial markets and their influence worldwide is growing, chiefly due to the privatization and development of pension fund systems. Moreover, foreign institutional investors are becoming a significant presence, bringing their trading habits and corporate governance preferences to international markets. In fact, we argue that the primary actors prompting change in many corporate governance systems are institutional investors, often foreign institutional investors. In other countries the role of institutional investors is limited. Instead, large blockholders, often in the form of individuals, family groups, other corporations, or lending institutions are the dominant players. We present the theoretical arguments for the involvement of investors in shareholder monitoring and a brief history of institutional ownership and activism in the United States and other countries. We also discuss studies of the efficacy of such activism.We then examine differences in ownership structures around the world and the implications of the interactions of these ownership structures for institutional investor involvement in corporate governance. Although there may be some convergence in corporate governance systems across countries, because of the endogenous nature of the interrelation among the factors of corporate governance the evolution will most likely .../…

Firm Complexity and Board of Director Composition

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“…While previous research has mainly analysed the roles played by boards, this is extended by positing that each director plays a role within boards by providing skills, knowledge, and expertise. As a consequence, the role played by the board of directors as a whole is a mosaic of the individual roles of each director, regarding both the internal, and external, environments (see Branson, 2003; Gillan et al , 2003; Hillman et al, 2000; Lehn et al , 2004; Zahra and Pearce, 1989).…”

The Declining Information Content of Dividend Announcements and the Effects of Institutional Holdings

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Does the influence of institutional investors depend on the institutional framework? An international analysis

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