The Institutional Investor Stewardship Myth: A Theoretical, Legal and Empirical Analysis of Prescribed Institutional Investor Stewardship in a Dutch Context

Abstract

The Enron scandal marked the beginning of an era in which corporate governance of listed companies became a central theme in the public debate. Regulators responded en masse in an attempt to restore confidence in the capitalistic system. Rules were established that placed greater demands on the way businesses were conducted. Corporate governance codes encouraged both companies and institutional investors to consider a shared responsibility for corporate governance at listed companies. Despite the rapid development of new guidelines, institutional investors as shareholders in investee companies do not always behave as desired. This led to the question: is institutional investor stewardship as prescribed by corporate governance codes a ‘myth’ created by regulators and policymakers: a widely held, but false belief or idea? This working paper provides a summary of the conclusions from research into the question if institutional investor stewardship in respect of Dutch listed companies as prescribed by the Dutch Corporate Governance Code is realistic?

Keywords: Institutional Investors, Corporate Governance, Stewardship, Code

JEL Classification: G00, K00