The Role of Institutional Investors in Corporate Governance and Their Performance as Stock Portfolio Managers in Brazil

Abstract

The aim of this paper is to analyze the influence of institutional investors (funds, banks, insurance companies, etc.) in corporate governance through stock valuation, and analyze their own performance as stock portfolio managers. The study includes 161 companies listed in BOVESPA (Sao Paulo Stock Exchange) from December/1994 to March/2000. The companies were classified according to the level of equity share held by institutional investors, and these were classified in 9 classes. The parameters used to evaluate stocks and institutional investors performance are based on CAPM (Capital Asset Pricing Model).