Corporate governance: Role of institutional investors

Institutional investors have become predominant players in financial markets and their influence worldwide is growing. The abuse of power by many corporations has prompted increased the need for active institutional participation to enforce governance practices. Only institutional investors will have sufficient stake to be able to hold large corporations accountable. Encouraged by the institutional investors, responsible companies are now examining their own practices and are following good governance practices. For investors it's a good reason …

…for use in evaluating and improving board processes. In short, the best evidence that institutional investors' objectives are reasonable is the changed attitude of management in many of our portfolio companies. However much remains to be done. In the past, Americans have tried to balance the power of big business with regulations enforced by its government. Today, many recognize that government regulation, while often necessary, is inherently inefficient when unaccompanied by a culture of self-policing.