How Conflicts of Interest Thwart Institutional Investor Stewardship

Butterworths Journal of International Banking and Financial Law, pp. 481-482, September 2011

2 Pages Posted: 11 Sep 2011 Last revised: 20 Sep 2011

Date Written: 2011

Abstract

This article examines conflicts of interest in the investment industry and remedies to enable institutional investors to be more active on corporate governance matters. The key points are: Conflicts of interest at investment firms arise at three levels – institution, individual, and group – all of which can impede their willingness and ability to engage investee companies actively on corporate governance matters; Resolving these conflicts requires strong remedies, ranging from their elimination to outsourcing voting decisions to independent third parties to establishing the right organisational culture; If existing conflicts of interest are left unchecked, efforts to promote institutional investor stewardship will falter and the “absentee landlords” share-ownership model will likely prevail.

Keywords: Institutional investors, conflicts of interest, stewardship, corporate governance

JEL Classification: G30, G34

Suggested Citation

Wong, Simon C. Y., How Conflicts of Interest Thwart Institutional Investor Stewardship (2011). Butterworths Journal of International Banking and Financial Law, pp. 481-482, September 2011. Available at SSRN: https://ssrn.com/abstract=1925485

Simon C. Y. Wong (Contact Author)

Northwestern University School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States

London School of Economics

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://www.lse.ac.uk/collections/law/staff/simon-wong.htm

Tapestry Networks ( email )

404 Wyman St.
Suite 225
Waltham, MA 02451
United States

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