Institutional Investors and Asset Managers’ Long-Term Engagement Under the SRD II: A Comparative Study Between Italy and the UK

This chapter reviews recent evidence on the use of long-term finance in developing countries (relative to developed ones) to try to identify where short- and long-term financing occurs, and what role different financial intermediaries and markets play in extending this type of financing. Although banks are the most important providers of credit, they do not seem to offer long-term financing. In fact, loans in developing countries have significantly shorter maturities than those in developed countries. Capital markets have become increasingly sizable since the 1990s and can provide financing at fairly long terms. But just a few large firms use these markets. Only some institutional investors provide funding at long-term maturities. Incentives for asset managers are tilted toward the short term due to constant monitoring. Instead, asset-liability managers have a longer-term horizon, as foreign investors in developing countries do. Governments might help expand long-term financing, although with limited policy tools.

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Corporate governance failures and the role of institutional investors in Pakistan

International Journal of Law and Management ◽

10.1108/ijlma-10-2016-0096 ◽

2018 ◽

Vol 60 (2) ◽

pp. 571-585 ◽

Cited By ~ 4

Author(s):

Samza Fatima ◽

Tom Mortimer ◽

Muhammad Bilal

Keyword(s):

Corporate Governance ◽

Comparative Study ◽

Institutional Investors ◽

Comparative Approach ◽

Content Type ◽

Business Market ◽

Governance Practices ◽

Code Of Corporate Governance ◽

The Uk

Purpose This paper aims to analyse a current theme of international interest regarding the increasing role of institutional investors in corporate governance. The role of institutional investors is getting elevated in world’s corporate market day by day due to their large shareholdings and having expertise in investment matters. However, their role and importance has not yet been accepted and explored in Pakistan. Therefore, this paper fills this gap and explores their role in Pakistan’s corporate governance by using a comparative study as to the role of institutional investors in the UK’s corporate governance. This paper identifies the failures of corporate governance in Pakistan and explores how institutional investors can help to overcome these issues. Design/methodology/approach This research paper uses a comparative approach based on documentary analysis. It conducts a comparative study of the role of institutional investors and the related code of corporate governance in Pakistan with that of the UK. It analyses the existing studies and the data relating to the role of institutional investors in Pakistan’s corporate governance and formulate recommendations to enhance the role of institutional investors for the betterment of corporate governance practices in Pakistan. Findings This paper finds that the role of institutional investors in Pakistan’s corporate governance is under-developed and the fund industry is immature. Though there is a considerable scope for them to work in Pakistan’s business market and play their role in the development of corporate governance in the listed companies of Pakistan. For this purpose, the guidance can be taken form the “Combined Code of the UK”. A number of recommendations have been formulated through which the role of institutional investors can be enhanced for the development of corporate governance practices in the business market of Pakistan. Originality/value This paper analyses the role of institutional investors in Pakistan to formulate recommendations through which this role may be enhanced for the development of corporate governance principles and practices in Pakistan. This paper fills a gap in the existing literature relating to the role of institutional investors in Pakistan, as there is a dearth of research in Pakistan concerning this issue. Further, it contributes to the on-going debate on the increasing role of institutional investors in corporate governance more widely.

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Stewardship and Shareholder Engagement in Germany

European Business Organization Law Review ◽

10.1007/s40804-020-00195-8 ◽

2020 ◽

Author(s):

Wolf-Georg Ringe

Keyword(s):

Value Creation ◽

Institutional Investors ◽

Best Practice ◽

Regulatory Framework ◽

Great Promise ◽

Political Reason ◽

Shareholder Engagement ◽

Asset Managers

Abstract Corporate stewardship holds great promise for the improvement of shareholder engagement and the encouragement of more responsible and long-term oriented value creation. This is particularly true since the outbreak of the global COVID-19 pandemic. Many countries have long adopted a best practice code for the stewardship role of institutional investors and asset managers, but Germany has so far refused to follow that trend. This paper explores the reasons for this reluctance, as well as whether the adoption of a Stewardship Code would still make sense in the regulatory framework of Germany today. Despite the increased presence of shareholder engagement (and even activism), several reasons may be put forward for why lawmakers have refused to adopt a stewardship code. This paper argues that the main political reason for this reluctance lies in the limited geographical reach of such a code, which would primarily be restricted to the (limited) domestic fund industry and would thus be unable to prescribe any meaningful principles to foreign-based asset managers. Still, I argue that the adoption of a code in the German context may make sense, for example to define expectations and to clarify the obligations of investee companies. Most importantly, it would benefit domestic investors that are typically ‘home biased’ and thereby frequently disproportionately invested in domestic funds.

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The UK Stewardship Code and investee earnings quality

Accounting Research Journal ◽

10.1108/arj-09-2016-0116 ◽

2018 ◽

Vol 31 (3) ◽

pp. 388-404 ◽

Cited By ~ 3

Author(s):

Chun Lu ◽

Jacqui Christensen ◽

Janice Hollindale ◽

James Routledge

Keyword(s):

Institutional Investors ◽

Design Methodology ◽

Earnings Quality ◽

Institutional Investor ◽

Content Type ◽

Accruals Quality ◽

The Uk ◽

Code Compliance

Purpose The UK Stewardship Code was the first voluntary governance code specifically for institutional investors. The Code sets out the principles of effective stewardship by institutional investors toward their investee companies with the aim of improving long-term risk-adjusted returns to shareholders. This paper aims to examine whether compliance by institutional investors with UK Stewardship Code is related to the earnings quality of their investee companies. Design/methodology/approach The association between institutional investor Code compliance and Code compliance quality and investee company accruals quality is investigated. Findings For a sample of large UK listed companies from 2013, the authors find reasonably high levels of compliance with the Code by institutional investors. The analysis does not suggest that Code compliance is positively related to investee company earnings quality. Rather, the finding is that substantial or long-term investments are more likely to result in effective stewardship regardless of Code compliance. Originality/value This study offers valuable insights regarding the efficacy of the Stewardship Code’s policy approach to improving corporate governance by institutional investors.

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