Shareholder Engagement and Stewardship: The Realities and Illusions of Institutional Share Ownership

17 Pages Posted: 20 Jun 2011

See all articles by Jaap W. Winter

Jaap W. Winter

Vrije Universiteit Amsterdam; University of Amsterdam; Insead

Date Written: 2011


Modern perceptions of good corporate governance assume that the general meeting has a meaningful role in the governance of listed companies and that shareholders make responsible use of their voting rights. Assessments after the financial crisis, however, indicate that institutional investors by and large are not engaged in any meaningful way. This paper analyses various factors that may lead institutional investors to be uninterested and unknowledgeable, including standard investment practices based on modern portfolio theory, diversification, prudency and solvency rules, intermediation through asset managers, fiduciary duties and portfolio manager remuneration. The paper distinguishes three types of engagement: Compliance, intervention and stewardship and argues that stewardship by institutional investors requires a radical rethinking and redesigning of institutional investment. Measures suggested by the European Commission in its Green Paper on Governance of Listed Companies may remove some obstacles and provide for some incentives but will not be enough to affect such transformation.

Keywords: corporate governance, institutional investors, shareholder voting, engagement

JEL Classification: D72, D81, G10, G14, G30, G34, G38, K20, K22

Suggested Citation

Winter, Jaap W. and Winter, Jaap W., Shareholder Engagement and Stewardship: The Realities and Illusions of Institutional Share Ownership (2011). Available at SSRN: or

Jaap W. Winter (Contact Author)

Vrije Universiteit Amsterdam ( email )

De Boelelaan 1105
+31653978419 (Phone)

University of Amsterdam ( email )

Oude Manhuispoort

Insead ( email )

Boulevard de Constance
77305 Fontainebleau Cedex

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