Institutional Investors, Corporate Ownership and Corporate Governance: Global Perspectives

This chapter examines the role of institutional investors in financial markets and corporate governance. In many countries institutional investors have become the predominant players in financial markets and their influence is growing worldwide, chiefly due to the privatization and development of pension fund systems. Moreover foreign institutional investors are becoming a significant presence, bringing their trading habits and corporate governance preferences to international markets. In fact we argue that the primary actors prompting change in many corporate governance systems are institutional investors, often foreign institutional investors. In other countries institutional investors have only a limited role. In these countries large block-holders, often in the form of individuals, family groups, other corporations or lending institutions, are the dominant players.