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Institutional Investors as Minority Shareholders

By Harvard Law School Program on Corporate Governance

In the paper, Institutional Investors as Minority Shareholders, which was recently made publicly available on SSRN, my co-author, Yishay Yafeh, and I study the role of institutional investors in markets where concentrated ownership and business groups are prevalent. Whereas investors in dispersedly-owned firms are primarily concerned with disciplining managers, investors in firms with a controlling shareholder are concerned with self-dealing and ?tunneling.? Institutional investors, however, can effectively use voting to discipline corporate insiders only when the law empowers minority shareholders to influence vote outcomes. Moreover, the presence of powerful families who control many public companies through business groups creates new potential conflicts for institutional investors.

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Full post as published by The Harvard Law School Corporate Governance Blog on September 10, 2010 (boomark / email).