Corporate governance and institutional investors

Abstract

Institutional investors operate on the basis of well-defined risk-return criteria. Ownership concentrated among identifiable groups of insiders (e. g. family interests, allied industrial concerns, banks & holding companies) [1].Ownership dispersed among large number of institutional and retail investors. Corporate governance has become one of the most commonly used phrases in the current global business vocabulary. The importance of corporate governance for corporate success as well as for social welfare cannot be overstated. Examples of massive corporate collapses resulting from weak systems of corporate governance have highlighted the need to improve and reform corporate governance at an international level. This paper examines the role of institutional investors in corporate governance and whether regulation is likely to encourage them to become active stewards.