Download or read book Investor Engagement written by Roderick Martin and published by OUP Oxford. This book was released on 2007-07-05 with total page 238 pages. Available in PDF, EPUB and Kindle. Book excerpt: The growth of shareholder value has been a major change in Western economies since the 1980s. This growth has reignited debates concerning relations between investors and managers. This book argues that investors are more than passive providers of finance, on whose behalf managers seek to maximize shareholder returns. Instead, many investors directly influence management practice, through investor engagement. The book examines the role of institutional investors and private equity firms, two types of investors with overlapping but different reasons for engagement. Questions addressed include: What are the incentives, and disincentives, for investment engagement? How is investor engagement organized? What areas of management practice are of particular concern to investors? The discussion shows in detail how private equity firms play a major role in developing new companies, beyond the provision of finance, especially in the IT, biotechnology, and pharmaceutical sectors. The discussion is primarily based on British and US research. The debate has wider international relevance, because there are strong pressures for establishing shareholder value as the international 'norm' for systems of corporate governance. Following a detailed discussion of Germany, the authors conclude that there is no inevitable trend to shareholder value: shareholder value depends upon complementary institutional arrangements in national business systems, which are far from universal. The book concludes with a critical analysis of the justifications for shareholder value and investor engagement, highlighting the weaknesses of both efficiency and equity justifications.
Download or read book Institutional Investor Engagement written by Mark Fenwick and published by . This book was released on 2018 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: In order to encourage meaningful and constructive engagement, countries have promulgated and published stewardship codes. The distinctiveness of such codes is the attempt to create more responsible and purposeful investor engagement. In particular, institutional investors must be viewed - and view themselves - as “stewards” of a company.This paper argues that stewardship codes do matter. Looked at in isolation, the impact of regulatory initiatives aiming to mobilize institutional investors can often seem underwhelming in their effects and might easily be perceived as failing, in some sense. In general, regulatory interventions don't seem to have an immediate or significant impact on the incentives and actions of investors.Nevertheless, the process of designing and then implementing regulatory measures can play a crucial role in triggering interest in, and discussion around, the need for a more engaged relationship between institutional investors and the companies that they own. It is in this less formal mode -- via a process of “spotlighting” -- that regulation can play a crucial role in fostering a corporate culture in which all of the stakeholders in a company become more engaged with senior management.
Download or read book ESG and Responsible Institutional Investing Around the World A Critical Review written by Pedro Matos and published by CFA Institute Research Foundation. This book was released on 2020-05-29 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt: This survey examines the vibrant academic literature on environmental, social, and governance (ESG) investing. While there is no consensus on the exact list of ESG issues, responsible investors increasingly assess stocks in their portfolios based on nonfinancial data on environmental impact (e.g., carbon emissions), social impact (e.g., employee satisfaction), and governance attributes (e.g., board structure). The objective is to reduce exposure to investments that pose greater ESG risks or to influence companies to become more sustainable. One active area of research at present involves assessing portfolio risk exposure to climate change. This literature review focuses on institutional investors, which have grown in importance such that they have now become the largest holders of shares in public companies globally. Historically, institutional investors tended to concentrate their ESG efforts mostly on corporate governance (the “G” in ESG). These efforts included seeking to eliminate provisions that restrict shareholder rights and enhance managerial power, such as staggered boards, supermajority rules, golden parachutes, and poison pills. Highlights from this section: · There is no consensus on the exact list of ESG issues and their materiality. · The ESG issue that gets the most attention from institutional investors is climate change, in particular their portfolio companies’ exposure to carbon risk and “stranded assets.” · Investors should be positioning themselves for increased regulation, with the regulatory agenda being more ambitious in the European Union than in the United States. Readers might come away from this survey skeptical about the potential for ESG investing to affect positive change. I prefer to characterize the current state of the literature as having a “healthy dose of skepticism,” with much more remaining to be explored. Here, I hope the reader comes away with a call to action. For the industry practitioner, I believe that the investment industry should strive to achieve positive societal goals. CFA Institute provides an exemplary case in its Future of Finance series (www.cfainstitute.org/research/future-finance). For the academic community, I suggest we ramp up research aimed at tackling some of the open questions around the pressing societal goals of ESG investing. I am optimistic that practitioners and academics will identify meaningful ways to better harness the power of global financial markets for addressing the pressing ESG issues facing our society.
Download or read book Institutional Investor Engagement Project written by and published by . This book was released on 2006 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Investor Engagement written by Roderick Martin and published by . This book was released on 2007 with total page 219 pages. Available in PDF, EPUB and Kindle. Book excerpt: "The growth of shareholder value has been a major change in Western economies since the 1980s. This growth has reignited debates concerning relations between investors and managers. The book argues that investors are more than passive providers of finance, on whose behalf managers seek to maximize shareholder returns. Instead, many investors directly influence management practice, through investor engagement. The book examines the role of institutional investors and private equity firms, two types of investors with overlapping but different reasons for engagement."--Résumé de l'éditeur.
Download or read book Knocking at the Boardroom Door written by Giovanni Strampelli and published by . This book was released on 2018 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Under the current context of (re)concentrated ownership, institutional shareholders are expected to play a more active role in corporate settings in making managers more accountable and urging them to favour a long-term view. Calls from institutional investors for engagement with the board have grown and private dialogue with directors is now an important instrument of institutional investor activism. In spite of this favourable trend, director-shareholder dialogue is still problematic. Public disclosure and insider trading rules set legal constraints on board-shareholder engagement. However, the reach of these constraints should not be overstated, as they do not appear to ban outright all private dialogue between directors and shareholders. In this regard, recommendations within corporate governance and stewardship codes, and from practitioners, have played a major role in developing a practical framework for director-shareholder dialogue that seeks to prevent the violation of insider trading and public disclosure rules, and to make dialogue more effective. Against this backdrop, this article will provide a comparative transatlantic overview of recent developments in the area of director-institutional shareholder dialogue in the US and in Europe with the aim of assessing the effective reach of legal constraints on board-shareholder dialogue under current legislation, and considering some practical solutions offered by corporate governance and stewardship codes that could facilitate board-shareholder engagement and enhance its effectiveness.
Download or read book Investor Engagement to Mitigate Climate Change written by Bill Rees and published by . This book was released on 2018 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: We use an experimental setting to investigate the impact of investor engagement and management attitudes on the reporting and performance of climate change management. Our results show that engaged companies were more likely than the control group to improve both their climate change reporting and performance, and that management recalcitrance significantly impeded improvement but did not eliminate the effectiveness of engagement. The study contributes to the understanding of the role of shareholder activism in advancing environmental, social and governance issues by offering evidence from non-confrontational engagement by a relatively small institutional investor and by highlighting the role of management. The study offers evidence to institutional investors that relatively small investment institutions can effectively engage with firms and change management practice without necessarily embarking on costly or time consuming programmes. The results also have implications for targeting engagement for maximum effectiveness and for the design and implementation of policy and regulation to promote better carbon management.
Download or read book Institutional Investor Activism written by William Bratton and published by OUP Oxford. This book was released on 2015-08-20 with total page 924 pages. Available in PDF, EPUB and Kindle. Book excerpt: The past two decades has witnessed unprecedented changes in the corporate governance landscape in Europe, the US and Asia. Across many countries, activist investors have pursued engagements with management of target companies. More recently, the role of the hostile activist shareholder has been taken up by a set of hedge funds. Hedge fund activism is characterized by mergers and corporate restructuring, replacement of management and board members, proxy voting, and lobbying of management. These investors target and research companies, take large positions in `their stock, criticize their business plans and governance practices, and confront their managers, demanding action enhancing shareholder value. This book analyses the impact of activists on the companies that they invest, the effects on shareholders and on activists funds themselves. Chapters examine such topic as investors' strategic approaches, the financial returns they produce, and the regulatory frameworks within which they operate. The chapters also provide historical context, both of activist investment and institutional shareholder passivity. The volume facilitates a comparison between the US and the EU, juxtaposing not only regulatory patterns but investment styles.
Download or read book Corporate Governance The Role of Institutional Investors in Promoting Good Corporate Governance written by OECD and published by OECD Publishing. This book was released on 2011-11-25 with total page 139 pages. Available in PDF, EPUB and Kindle. Book excerpt: Covering 26 jurisdictions including in-depth review of Australia, Chile and Germany, this report focuses the role of institutional investors in promoting good corporate governance practices including the incentives they face to promote such outcomes.
Download or read book Institutional Investors as Owners written by Serdar Çelik and published by . This book was released on 2013 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides a framework for analysing the character and degree of ownership engagement by institutional investors. It argues that the general term "institutional investor" in itself doesn't say very much about the quality or degree of ownership engagement. It is therefore an evasive "shorthand" for policy discussions about ownership engagement. The reason is that there are large differences in ownership engagement between different categories of institutional investors. There are also differences in ownership engagement within the same category of institutional investors such as hedge funds, investment funds, etc. These differences arise from the fact that the degree of ownership engagement is determined by a number of different features and choices that together make up the institutional investor's "business model". When ownership engagement is not a central part of the business model, public policies and voluntary standards aiming to improve the quality of ownership engagement among institutional investors are likely to have limited effect. Based on an empirical overview of the relative size of different categories of institutional investors, the paper identifies a set of 7 features and 19 choices that in different combinations define the institutional investor's business model. These features and choices are then used to establish a taxonomy for identifying different degrees of ownership engagement ranging from "no engagement" to "inside engagement."
Download or read book Hedge Fund Activism written by Alon Brav and published by Now Publishers Inc. This book was released on 2010 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: Hedge Fund Activism begins with a brief outline of the research literature and describes datasets on hedge fund activism.
Download or read book Ownership Activism and Engagement written by Terry McNulty and published by . This book was released on 2017 with total page 13 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research Question: We research two questions: First, why do some institutional investors operate at a distance from organizations seemingly acting only to “exit” and “trade” shares while others actively engage through various means of “voice”? Second, what processes and behaviour are associated with active ownership? Research Findings/Insights: We develop the concept of active ownership by drawing on contrasting theories and images of ownership, identifying antecedents of active ownership and distinguishing between alternative processes of active ownership. Theoretical/Academic Implications: Alternative pathways to active ownership contrast the distant, sometimes adversarial nature of shareholder activism with an engaged, collaborative relationship between investors and corporations. Few studies examine active ownership as a process of engagement and mutual exchange between parties taking a generally longer-term perspective towards investment in the firm and its affairs. After modelling active ownership, we develop a research agenda of substantive issues ranging from market and institutional conditions, through investment organization and practice, to board and investor relations. Practitioner/Policy Implications: Opening up the multidimensionality of engagement and relations between investors and corporations is crucial to promoting good corporate governance. Policymakers and practitioners require such knowledge when anticipating and developing adjustments to institutions of corporate governance.
Download or read book Corporate Governance Strengthening Latin American Corporate Governance The Role of Institutional Investors written by OECD and published by OECD Publishing. This book was released on 2011-07-01 with total page 78 pages. Available in PDF, EPUB and Kindle. Book excerpt: This report reflects long-term, in-depth discussion and debate by participants in the Latin American Roundtable on Corporate Governance.
Download or read book Institutional Investors and Stewardship written by Kenta Fukami and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The sustained growth of institutional investors' assets under management, together with the growing use of passive investment strategies, raises the question of whether existing frameworks adequately address issues related to investor engagement and disclosure. There has been a growth in the regulation of institutional investors and market intermediaries to address conflicts of interest and to enhance their transparency. In parallel, the adoption of stewardship codes and the number of signatories to such codes has been increasing. Their proliferation and to some extent convergence offers insights on recognised good practices. The paper also explores the apparent increase in engagement among institutional investors with respect to environmental, social and governance (ESG) issues, their increasing reliance on ESG ratings and data services, and whether regulatory frameworks or guidance should evolve to take into account these new developments.
Download or read book Talent Strategy Risk written by Bill McNabb and published by Harvard Business Press. This book was released on 2021-07-06 with total page 190 pages. Available in PDF, EPUB and Kindle. Book excerpt: Long-term value creation—the board's new agenda. A big shift in public ownership has created a new set of challenges for boards. Index funds managed by firms like Vanguard, BlackRock, and State Street represent an emerging class of permanent institutional investors who are focused on creating and preserving long-term corporate value. These investors are stating in no uncertain terms that simply managing for short-term shareholder profit is not acceptable. Bill McNabb, Ram Charan, and Dennis Carey have been on the front lines of these changes with the investment community, corporate boards, and top-level management teams. Since TSR (total shareholder return) cannot keep the short and long term in balance, the authors argue, boards should focus on a different kind of TSR—talent, strategy, and risk—because decisions and actions around these factors, more than any others, determine whether or not a company creates long-term value. This book redefines the board's agenda and explains how to: Build and incentivize the right leadership team Help leaders take a longer view and communicate it to investors Refresh board composition and create diversity to meet the new challenges Keep major risks, such as cyberattacks and sexual harassment allegations, front and center Analyze the business through the eyes of a shareholder activist With the new realities of corporate ownership, boards need to lead for the long term. This authoritative book shows them how.
Download or read book Institutional Shareholder Engagement with Japanese Firms written by Gordon L. Clark and published by . This book was released on 2015 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores how shareholder engagement on environmental, social and governance (ESG) issues is informally exercised by a large global institutional investor with locally embedded, geographically remote firms. By studying a UK asset manager's shareholder engagement strategies on ESG issues toward Japanese firms, we document three findings. First, it is found that main target firms of engagement activities are large firms with global operations, and that corporate governance issues are the most important engagement topic in Japan. Second, in trying to effectively exercise voice across societies, engagement activities are conducted with geographically remote target firms on various ESG agendas through a self-enforcing, face-to-face, and sometimes collective manner. Finally, this study argues the gap between the asset manager's motivation to engage and local target firms' readiness to respond due to corporate organisational and language issues.
Download or read book The Role of Institutional Investors in Corporate Governance written by Petra Nix and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate governance has emerged as a decisive business issue. Less corporate governance research is undertaken in civil law countries like Germany. In this thesis, the role of institutional investors in Germany is studied with the aim of providing an answer to the following research question: What role do independent institutional investors play in the corporate governance of listed German companies? This study follows an inductive qualitative research approach. The research model is based on six variables - board oversight, board nomination, identifying weaknesses, making recommendations, introducing changes in corporate strategy and exercising institutional power - to determine the role of institutional investors and to provide answers. Overall, the results show that the participants of the research study experience the role and responsibilities of institutional investors in the German two-tier corporate governance system as weak to medium across all six variables. The handling of recommendations from institutional investors to companies is not structured or executed in a systematic way by the study participants. The results indicate that the interviewees are convinced that institutional investors could be valuable partners in strengthening and improving corporate governance. They can play a role in corporate governance and can add value because they have a good understanding about the strategy and business model of the companies, expertise in research & analysis as well as a good sector expertise. However, the type of institutional investor matters in corporate governance. The strongest players are private equity and hedge funds. The weakest players are endowments and insurances. The most common company situations when institutional investors prompt change are underperformance, special companysituationsicrisis, corporate finance issues and management remuneration. The majority of the study participants expect a higher shareholder engagement in the future. Most of them have a positive point of view about the future role of institutional investors in corporate governance. III R The managerial implications of this study are that the investor relations function is well established and the programmes are sufficiently executed in German companies. Communication is the most appropriate measure. However, other typical and presumably more powerful measures like use of voting rights, engagement in the AGM, regular contact to the members of the supervisory board, taking a seat in the supervisory board, owning a meaningful company stake and collaboration with other shareholders seem to play a minor role. There is still potential for institutional investors to improve their role in corporate governance in German companies. In order to improve their influence in corporate governance institutional investors need to be prepared to pursue an escalation strategy. This encompasses for example to increase their stake to a meaningful and powerful level and/or they need to collaborate effectively and systematically with other shareholders to increase their acceptance vis-a-vis the company and to .ask for a seat in the supervisory board. However, such an approach also needs a strong long-term commitment and investment perspective as well as an attitude that also considers the long-term interests of the company. It can be concluded that institutional investors with a high level of expertise can contribute to the widely discussed improvement of the competence and independence of German supervisory boards. Important prerequisites of institutional investors to play a role in corporate governance are no conflict of interest and a sufficient sector expertise. Therefore, disadvantages like conflict of interest and lack of expertise have to be addressed properly. The results from this research can be used to draw lessons for (1) members of supervisory boards, members of the management board (in particular CEOs, and CFOs), as well as investor relations officers of listed companies, who want to improve governance and the relationship with their institutional shareholders; (2) institutional investors who want to enhance their engagement in their portfolio companies; and (3) standard setters like institutions and commissions that want to improve corporate governance.
