Institutional Directors: Do They Matter?

Over the last two decades, the dramatic increase in institutional investors’ ownership of rival companies has raised questions about collusive corporate policies.[1] However, it is still unclear how common shareholders engage with and influence corporate decision-making, especially when it comes to antitrust issues (Ginsburg and Klovers, 2018; Scott Morton and Hovenkamp, 2017; Hemphill and Kahan, 2019).[2]

One frequently mentioned mechanism is board representation (Azar 2021; Eldar, Grennan, and Waldock, 2021). Its plausibility rests on the well-settled principle in U.S. corporate law that directors are responsible for making all major corporate decisions (Bebchuk, 2004). Given their considerable ownership stake … Read more