Open AccessInstitutional investors as stewards of the corporation: Exploring the challenges to the monitoring hypothesis
Author(s) -
Ivanova Mila R.
Publication year - 2017
Publication title -
business ethics: a european review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.343
H-Index - 35
eISSN - 1467-8608
pISSN - 0962-8770
DOI - 10.1111/beer.12142
Subject(s) - institutional investor , corporate governance , transparency (behavior) , stewardship (theology) , business , shareholder , corporation , accounting , face (sociological concept) , public relations , finance , political science , sociology , politics , law , social science
The study explores the challenges UK‐based institutional investors face when trying to monitor investee companies and influence their social, environmental, and governance practices. Consistent with previous research, I find that misalignment of interests within the investment chain and dispersed ownership are factors which inhibit investor activism. However, other underexplored challenges include lack of investee company transparency and investor experience in activism, as well as low client demand for engagement and internal conflicts of interest. The results contribute to the literature on institutional investor activism by using direct empirical evidence to systematically discuss the challenges to stewardship. Given the intensification of media and regulatory attention on shareholders in the post‐global financial crisis era, coupled with investors’ growing awareness and practice of stewardship, the research opens new avenues for enquiry which go beyond the on‐going debate about the monitoring versus short‐termism roles of institutional investors.