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Problems and limitations of institutional investor participation in corporate governance

Webb, R., Beck, M. and McKinnon, R. (2003) Problems and limitations of institutional investor participation in corporate governance. Corporate Governance: An International Review, 11 (1). pp. 65-73. ISSN 0964-8410

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Abstract

During the past decade, major governance breakdowns in public limited companies have brought issues of corporate governance to the forefront of debate. As a result, a series of governance codes have been introduced into the UK that have sought to obligate publicly listed companies to certain practices in their overall operations. One of the codes, the Hampel Code, specifically called for an increased role for institutional investors in governance issues. Using financial system theory as a framework for discussion, this paper questions the viability of institutional investors taking a more active role in monitoring and enforcing governance in the UK. It is argued that, if institutional investors choose to increase participation, then it could create anomalies to the efficient operation of the capital markets, involve institutional investors as delegated monitors, increase costs and create free rider problems.

Item Type: Article
Institution: The University of York
Academic Units: The University of York > The York Management School
Depositing User: York RAE Import
Date Deposited: 12 Jun 2009 13:13
Last Modified: 12 Jun 2009 13:13
Published Version: http://www.blackwell-synergy.com/doi/abs/http://dx...
Status: Published
Publisher: Blackwell Publishing
Identification Number: 10.1111/1467-8683.00302
URI: http://eprints.whiterose.ac.uk/id/eprint/5915

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