Institutional Investors, Voting Power, and Voting Patterns

Institutional shareholders’ role in corporate governance and their effect on firm value have been explored, both theoretically and empirically, mainly in the context of dispersed-ownership environments like the United States or the United Kingdom. In these common law countries, institutional investors play an active role, initiating proposals of their own regarding compensation [1] and appointment of board members. [2] In other countries, however, where corporate ownership is more concentrated and controlling shareholders are more prevalent, institutional investors are expected to fulfill a different function, namely, to protect minority shareholders in their conflict with controlling shareholders by, for example, voting against … Read more