Institutional Investors and Corporate Governance

Institutional Investors and Corporate Governance

Amil Dasgupta, Vyacheslav Fos, Zacharias Sautner

Series number :

Serial Number: 
700/2020

Date posted :

September 22 2020

Last revised :

July 13 2021
SSRN Share

Keywords

  • institutional investors • 
  • Corporate governance • 
  • exit • 
  • voice • 
  • shareholder activism • 
  • Proxy Voting Advisors

We provide a comprehensive overview of the role of institutional investors in
corporate governance with three main components. First, we establish new stylized
facts documenting the evolution and importance of institutional ownership.
Second, we provide a detailed characterization of key aspects of the legal and

regulatory setting within which institutional investors govern portfolio firms. Third,
we synthesize the evolving response of the recent theoretical and empirical academic
literature in finance to the emergence of institutional investors in corporate
governance. We highlight how the defining aspect of institutional investors – the
fact that they are financial intermediaries – differentiates them in their governance
role from standard principal blockholders. Further, not all institutional investors
are identical, and we pay close attention to heterogeneity amongst institutional
investors as blockholders.

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Published in

Published in: 
Publication Title: 
Forthcoming in Foundations and Trends in Finance

Authors