Leveraging on Home Bias: Large Stakes and Long-Termism by Swedish Institutional Investors
Nordic Journal of Business ISSN 2342-9011, Forthcoming
38 Pages Posted: 25 Oct 2017 Last revised: 27 Oct 2017
Date Written: October 25, 2017
This paper focuses on the domestic institutional investors’ ability to refocus their investments strategy in the direction of more of long-term committed capital. Suggesting a reconceptualization of domestic institutions in the sense that they can leverage on information asymmetries connected to home bias, we take an institutional approach to domestic investor rationale. We conduct qualitative and descriptive research to illuminate how Swedish institutions relate to expectations to engage in investee companies. The detected more focused investment strategies can primarily be explained through a (i) refocusing of risk-allocation mandates related to longer investments horizons, (ii) leveraging on home bias, and (iii) an owner-friendly governance model. By highlighting the embedded character of domestic institutions’ engagement, our research complements conventional ideas on institutional investors’ rational disinterest in engagement. With new norms, behavior changes.
Keywords: Corporate Governance, Institutional Investors, Long-Termism, Portfolio Allocation Models, Home Bias, Nomination Committee
JEL Classification: G, M
Suggested Citation: Suggested Citation