Corporate Governance, Corporate Ownership, and the Role of Institutional Investors: A Global Perspective

TLDR

Institutional investors have become dominant players in many countries, yet governance practices may converge over time but endogenous interrelations suggest persistent variation in governance structures. The study examines how corporate governance relates to ownership structure and the role of institutional investors, including cross‑country differences and their implications. The authors discuss the theoretical basis, history, and empirical evidence for institutional investor involvement in shareholder monitoring, and analyze cross‑country ownership differences and their implications.

Abstract

We examine the relation between corporate governance and ownership structure, focusing on the role of institutional investors. In many countries, institutional investors have become dominant players in the financial markets. We discuss the theoretical basis for, history of, and empirical evidence on institutional investor involvement in shareholder monitoring. We examine cross-country differences in ownership structures and the implications of these differences for institutional investor involvement in corporate governance. Although there may be some convergence in governance practices across countries over time, the endogenous nature of the interrelation among governance factors suggests that variation in governance structures will persist.