Sovereign Shareholder Activism: How SWFs Can Engage in Corporate Governance

Bocconi SWF Investment Lab Annual Report, 2013

Ohio State Public Law Working Paper No. 264

4 Pages Posted: 8 Jul 2014

See all articles by Paul Rose

Paul Rose

Ohio State University - Moritz College of Law; Bocconi University - BAFFI Center on International Markets, Money, and Regulation; Tufts University - The Fletcher School of Law and Diplomacy; Fundación Instituto de Empresa, S.L. - IE Business School

Date Written: July 1, 2014

Abstract

As the number of, and assets controlled by, sovereign wealth funds (SWFs) has increased dramatically in recent years, so too has scrutiny about how SWFs are making use of these assets. A consensus appears to be developing that large institutional investors, including SWFs, should be aware of corporate governance issues at their portfolio companies, even if they choose not to actively attempt to influence management. Because they are long-term investors and often under political and regulatory scrutiny that makes them less likely to sell, SWF capital tends to be captive capital. Thus, protecting long-term returns by monitoring governance is a priority for many sovereign investors. The difficulty for most SWFs -- and the issue this brief paper addresses -- is how to hold mangers accountable without selling or directly engaging in ways that would concern regulators.

Keywords: sovereign wealth fund, shareholder activism, corporate governance

JEL Classification: K2, K20, K22, K23, K33

Suggested Citation

Rose, Paul, Sovereign Shareholder Activism: How SWFs Can Engage in Corporate Governance (July 1, 2014). Bocconi SWF Investment Lab Annual Report, 2013; Ohio State Public Law Working Paper No. 264. Available at SSRN: https://ssrn.com/abstract=2461227 or http://dx.doi.org/10.2139/ssrn.2461227

Paul Rose (Contact Author)

Ohio State University - Moritz College of Law ( email )

55 West 12th Avenue
Columbus, OH 43210
United States

Bocconi University - BAFFI Center on International Markets, Money, and Regulation ( email )

Milano, 20136
Italy

Tufts University - The Fletcher School of Law and Diplomacy ( email )

Medford, MA 02155
United States

Fundación Instituto de Empresa, S.L. - IE Business School ( email )

Calle Maria de Molina 12, Bajo
Madrid, Madrid 28006
Spain

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