Institutional Investors as Owners

Celik S., Isaksson M., OECD Corporate Governance Working Papers, No.1, OECD Publishing, 2013.

CICA Summary

The paper offers a framework for analysing the character and the degree of ownership engagement by institutional investors.

Investments in publicly listed companies coming from institutional investors have been following an increasing trend. The question that was aroused is: how should they carry out corporate functions associated with share ownership?

Not all investors may be interested in participating in ownership engagement. Many large institutional investors rely on consultants in turn for a standardized advice on voting practice within the governance board. This is a cost for the institutional investor not always having interest in participating in governance, while at the same time carrying out bad quality ownership engagement and deterring the governance decisions. Therefore, the degree of ownership engagement shouldn’t be determined by share-ownership as such, but by the nature of the investor’s business model.

  1. The institutional investors’ landscape that offers an overview of the characteristics and activities related to traditional investors, alternative investors and asset managers. This section also describes the complexity of investment chain
  1. The determinants and the level of the ownership engagement of institutional investors
  1. The question of “corporate governance taxonomy of institutional investors” gives information on the way to determine the institutional investor’s business model

Download the full OECD paper here.