Tag archives: institutional investors

Implications of the Collaborative Model of Corporate Governance

In a recent paper, Jill Fisch and Simone Sepe outline a new model for corporate governance: the Insider-Shareholder Collaborative model.

A Shift Towards Collaboration

Two models have previously dominated the corporate governance discourse: (i) the management-power model and (ii) the shareholder-power model. The former emphasizes a board’s decision-making authority as the corporation’s essential coordinating and monitoring system, the latter emphasizes enhanced shareholder power as the means to hold insiders accountable.

The authors argue these models are outdated since both assume insiders and shareholders are engaged in a struggle for power, when increasingly, the insider-shareholder relationship is collaborative rather than … Continue Reading

Fasten your seatbelts: preparing for the globalization of hedge fund activists

Activist hedge funds have grown up and gone global, reinforcing the need for companies of all shapes and sizes to plan ahead for the possibility of an attack. A recent article by Martin Lipton in the Harvard Law School Forum of Corporate Governance and Financial Regulation reviews recent developments in the activist landscape and reconfirms the importance of preparing for an attack.

The Fight Has Gone Global

One recent development is the expansion of hedge fund activism across the globe within the past two years. Mr. Lipton suggests that activism typically associated with the American marketplace is quickly gaining traction … Continue Reading

The CCGG’s stewardship principles

Last month, the Canadian Coalition for Good Governance (CCGG) published its new Stewardship Principles paper designed to assist institutional investors fulfil their responsibilities to their beneficiaries or clients and enhance the value of their investments. The principles reflect what the CCGG believes are appropriate stewardship responsibilities for institutions investing in Canadian public equities and are directed to both asset owners and asset managers. While it is not the institutional investor’s role to manage the public companies in which it invests, in order to fulfil its role as fiduciary to its beneficiaries and clients, the CCGG believes an institutional … Continue Reading

Institutional investors managing US $17 trillion announce new corporate governance framework

In a move likely to have significant impacts on corporate governance, a group of institutional investors managing upwards of US $17 trillion has announced the formation of the Investor Stewardship Group (the Group). The Group has adopted a framework of certain non-binding investor-friendly principles, many of which are either common or already legally recognized in Canada, illustrating one of Canada’s greatest attractions as an investment destination: its strong protections of investor rights. On the other hand, the Group takes a skeptical view of a common practice in Canada: dual-class share structures.

The Group

The Group is a collective of … Continue Reading

The Dissatisfied Institutional Investor: Intervene or Exit?

Considering the role of institutional investors in influencing corporate governance is critical to effective corporate decision making. Broadly, dissatisfied institutional investors choosing to act can do one of the following: (a) intervene with management, either cooperatively or uncooperatively as dissident shareholders, or (b) exit by selling their shares. Many theories have been put forward to explain investor conduct, but who better explain the rationale behind it than investors themselves? In a new article entitled Behind the Scenes: The Corporate Governance Preferences of Institutional Investors[1] (Behind the Scenes), the authors survey 143 institutional investors worldwide to find out … Continue Reading

The CCGG makes a push for enhanced proxy access

The Canadian Coalition for Good Governance (CCGG) recently released its much anticipated policy paper on “proxy access”, a term which refers to shareholders’ conceptual right  to nominate directors and have those nominees placed on management’s ballot. The CCGG takes the position that this right, which is supplemental to a shareholders right to elect directors, “is an essential component of shareholder democracy”. In a previous post, Kaitlind de Jong reported on the efforts the CCGG has undertaken to promote enhanced proxy access for shareholders in Canadian public companies prior to the release of its policy.

Current best practices in Canada … Continue Reading

Decision-making and Institutional Investors: Prevalent Factors and Key Market Distinctions

According to the recently published Global Institutional Investors Insight survey, shareholder activism is on the rise. The survey, which canvassed over 500 institutional investor and sell-side research analysts from across North American, European and Asian markets, reports that more than three quarters (77%) of those surveyed believe that activism levels will increase in the coming three years and become more prevalent worldwide.

The survey also highlights the four most prevalent factors that investors evaluate when considering whether to invest in a company:

  • Good track record in meeting earnings expectations (65% of investors).
  • An equity story that is clearly defined
Continue Reading

Shareholders Shaking Up Japan

A Japanese research firm suggests that there may be a record 14 shareholder proposals (all with the intention of creating higher returns) that will be made in the next few weeks as annual general meeting season begin in Tokyo and elsewhere.

Why is this surprising? In the past it has been uncommon for shareholders in Japan’s institutions to oppose company resolutions. Activists were considered ‘bad guys.’ What has changed this dynamic is the creation of the Stewardship Code (the “Code”) under the tutelage of the economically driven Prime Minister Shinzo Abe. In force since May, it already has been followed … Continue Reading

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