Institutional Investors, Corporate Governance and the New International Financial Architecture

INTERNATIONAL FINANCIAL SECTOR REFORM: STANDARD SETTING AND INFRASTRUCTURE DEVELOPMENT, S. Goo, D. Arner and Z. Zhou, eds., pp. 455-485, Kluwer Law International, 2002

31 Pages Posted: 22 Nov 2006

See all articles by Ian Ramsay

Ian Ramsay

Melbourne Law School - University of Melbourne

Geofrey P. Stapledon

University of Melbourne - Law School

Abstract

The Asian financial crisis has led to attempts to better understand the dynamics of the global financial system. International economic institutions have identified principles of corporate governance as an essential element in improving the global financial architecture. This chapter explores the links between the new international financial architecture and corporate governance and then considers the impact of the growth of institutional investors on corporate governance practices.

The chapter is in two main sections. In the first section, the authors examine the role of corporate governance in improving the international financial architecture. They consider definitions of corporate governance and their implications; the international interest in corporate governance and the development of corporate governance principles by organisations such as the Organisation for Economic Co-operation and Development (OECD) and the Organisation for Asia-Pacific Economic Co-operation (APEC). They also consider why corporate governance is important and examine various corporate governance mechanisms.

In the second section, the authors turn to consider the role of institutional investors in corporate governance. They commence this section by documenting significant differences between countries and also between regions in the shareholdings of institutional investors. Institutional investment in a number of Asian countries has been much lower than that of countries as the United Kingdom, the United States and Australia. They then turn to consider the implications of institutional investment for corporate governance. Although there has been a substantial increase in institutional shareholdings in many countries, the evidence is mixed in relation to whether institutional investors have been more actively involved in corporate governance matters. As part of considering reasons for this, the authors examine the views of institutional investors on corporate governance issues at both an international level and also in Australia.

Suggested Citation

Ramsay, Ian and Stapledon, Geofrey P., Institutional Investors, Corporate Governance and the New International Financial Architecture. INTERNATIONAL FINANCIAL SECTOR REFORM: STANDARD SETTING AND INFRASTRUCTURE DEVELOPMENT, S. Goo, D. Arner and Z. Zhou, eds., pp. 455-485, Kluwer Law International, 2002, Available at SSRN: https://ssrn.com/abstract=946317

Ian Ramsay (Contact Author)

Melbourne Law School - University of Melbourne ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 5332 (Phone)

HOME PAGE: http://law.unimelb.edu.au/about/staff/ian-ramsay

Geofrey P. Stapledon

University of Melbourne - Law School ( email )

Victoria 3010
Australia
+61 3 8344 8916 (Phone)
+61 3 8344 9971 (Fax)

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