
The Push Towards Corporate Guidelines
In recent years, there has been a debate in the corporate world about the capabilities and incentives of institutional investors to invest in corporate stewardship – defined as monitoring, voting, and engagement – of their portfolio companies. The main focus has been on mutual funds, which hold most of the assets of institutional investors.
According to conventional wisdom, which finds support in theoretical and empirical studies, institutional investors are not active stewards for four reasons. First, managers of mutual funds have poor incentives to invest in active stewardship because of their compensation structure – a tiny fixed percentage of assets … Read more