The role of institutional investors as the next frontier in corporate governance: A case on Dhaka Stock Exchange (DSE)

Abstract

Institutional investors are financial institutions that accept funds from third parties for investment in their own name and act on behalf of parties as such. They include commercial banks, Non-Banking Financial Institutions (NBFIs), insurance companies, merchant banks and broker houses, state-owned companies, asset-management companies, mutual funds and other manufacturing companies. Institutional investors are a major force in many capital markets. In case of Bangladesh, the capital market has been going through an image crisis after 2010 capital market crash. For that, institutional investors are still on the sideline due to lack of confidence. Nevertheless, for the sake of corporate governance of the overall capital market, engagement of institutional investors is crucial and much required. The aim of the study is to give a general overview of institutional investors as a next big thing in corporate governance and a theoretical review of Dhaka Stock Exchange (DSE). It is a study that has been conducted based on only Dhaka Stock Exchange (DSE) perspective. It has shed light on the major institutional investors of Dhaka Stock Exchange and it has been identified that private commercial banks are (PCBs) are the largest investor followed by other institutional investors. Under this study, several areas have been identified which needs reforms and improvement. At the end of it, along with the concluding remarks, few points as suggestions are proposed for the institutional investors of Bangladesh based on the findings.